The summer months and October are known being tough on stocks, but seasonal trends don’t always repeat. Even when they do, it’s not necessarily a call for long-term investors to move away from equities. This year could be an example of a good time to remain invested during the summer doldrums.
For the 90 days ending Aug. 4, the S&P 500 and the Nasdaq-100 (NDX) returned 11.7% and 15.5%, respectively, indicating selling in May and going away hasn’t been a winning 2025 strategy. Perhaps adding to the encouraging signs for the NDX-tracking Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) is that while some market observers believe potential headwinds could arise over the remainder of summer and into autumn, they also view the bull market as remaining intact.
In a recent report, UBS Wealth Management reported that volatility could perk up over the next several weeks, but if elevated turbulence comes to pass and pushes equities lower, it may be an ideal time for investors that are currently underweight risk assets to lift those allocations.
Catalysts Abound for QQQ This Summer
UBS sees domestic consumer spending as sturdy and predicts “long-term growth opportunities in AI, power and resources, and longevity.” Artificial intelligence (AI) bullishness, assuming it pays off, is material to QQQ and QQQM. The Invesco ETFs allocate 53.68% of their rosters to tech stocks, many of which are AI plays.
Additionally, UBS commentary on the resilience of the U.S. consumer is something for QQQ/QQQM investors to consider. Consumer discretionary (at nearly 13%) is the third-largest sector weight in the ETFs.
Another factor could work in QQQ/QQQM ‘s favor into year-end. While the One Big Beautiful Bill Act (OBBA) has been derided for not going far enough in terms of spending reductions, it’s now law. This means it could be a catalyst for stocks.
“We believe the US equity bull market is intact and expect further gains over the next year amid a resilient US economy, a weaker dollar, and an earnings boost from the One Big Beautiful Bill Act. Trade uncertainty and elevated valuations could be a modest headwind for equities in the near term, but we think investors can navigate volatility with capital preservation and/or phasing-in strategies,” added UBS.
The money manager said tech, communication services, financials, health care, and utilities are its preferred sector ideas. Tech and communication services combine for about 69% of the QQQ/QQQM portfolios.
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