The Motley Fool·2025-04-02 11:15Core Viewpoint - The Nasdaq Composite has experienced a significant decline of approximately 15% from its recent peak, entering correction territory due to various concerns including new tariffs, weakening consumer sentiment, and geopolitical tensions [1] Group 1: Performance of the Magnificent Seven - The "Magnificent Seven" tech giants, including Microsoft, Apple, Amazon, Alphabet, Nvidia, Meta Platforms, and Tesla, have seen an average decline of 25% from their 2025 peaks, with only Apple performing better than the Nasdaq [2] - The Magnificent Seven stocks are more affected than the overall tech sector due to their high valuations and growth stock characteristics, leading to profit-taking amid fears of a weakening economy [4] - Historical data shows that during the last major sell-off in 2022, these stocks experienced significant declines, with Nvidia, Meta, Amazon, and Tesla dropping by 50% or more at one point [9] Group 2: Market Dynamics and Investor Behavior - The differing business models and subsector operations of the Magnificent Seven lead to varying sensitivities to economic factors like tariffs and inflation [5] - The 2022 sell-off was driven by a realization that pandemic-driven growth was temporary, resulting in slowed revenue for major tech companies [6] - Despite the current market turmoil, elite companies like those in the Magnificent Seven have historically rebounded from downturns, as evidenced by their recovery to all-time highs in 2023 and 2024 [11] Group 3: Investment Strategy - Investors are advised to remain patient during market corrections, as high-quality businesses are likely to return to new all-time highs in future bull markets [12] - The potential for further declines exists, with any of the Magnificent Seven stocks possibly falling by 50% or more if recession signs emerge [10]