Concerns over valuations, tariffs, and slowing economic growth triggered an ugly week for stocks.
A sell-off in the Magnificent Seven trade pushed the Nasdaq Composite (^IXIC) into correction territory. The index closed the week down 3.6%, while the S&P 500 (^GSPC) recorded its worst weekly performance since September.
At close: March 7 at 4:43:27 PM EST
^GSPC ^IXIC
But before investors hightail it, strategists told me it’s not time to panic and pile into the recession trade just yet. Rather, they see the recent sell-off as a buying opportunity, as long as investors are willing to look past uncertainty out of Washington, D.C.
“We get a correction once every 12 months, and this time, it’s spurred by the tariffs,” Nancy Tengler of Tengler Investments told me. “If they’re short-lived, then this is just an opportunity to buy stocks for the long term.”
And according to Tengler, technology and financials are among the two trades that stand out.
“The defensive trade is just that, a trade,» she remarked. «We like financials … And the use cases for AI are exploding. This is an industrial revolution like we haven’t seen for 100 years … Use the weakness to add to your holdings.»
Valuation corrections paired with strong earnings make the group more compelling too. Market cap losses from Nvidia’s (NVDA) record high in January reached $1 trillion in value during Friday’s trade. Recently, the chips giant announced fourth quarter earnings that included an 82% year-over-year jump in earnings per share.
At close: March 7 at 4:00:01 PM EST
NVDA TSLA
“Tariffs add uncertainty but it doesn’t change the demand cycle,” Wedbush’s Dan Ives told me on Yahoo Finance’s Morning Brief. “This is not going to end the tech bull market; it’s a scare, but I see more opportunity than a reason to head for the hills.”
Ives reiterated his stance that Mag Seven stocks Nvidia, Microsoft (MSFT), Alphabet (GOOGL, GOOG), Amazon (AMZN), and Tesla (TSLA) remain companies to own, along with Palantir (PLTR) and Salesforce (CRM), arguing “any weakness is a buying opportunity given the fundamental demand picture.”
Another underperforming sector drawing attention this week is financials. The KBW Nasdaq Bank Index (^BKX) erased its post-election rally, falling nearly 13% from its recent peak as concerns around a weakening economy and sluggish dealmaking weighed on the sector.
However, strategists argue that beyond the headline worry, key catalysts for the sector remain intact: deregulation, attractive valuations, and the prospect of lower interest rates.
At close: March 7 at 5:15:59 PM EST
Truist’s Keith Lerner, who recently downgraded equities from Attractive to Neutral, maintains his «attractive» outlook on Financials (XLF). In a note to clients, Lerner wrote the group “should benefit from pro-growth policies, deregulation and a pickup in mergers and acquisitions.”
