Magnificent seven stocks lose $1.7 trillion

What are Magnificent seven stocks?

"Magnificent 7 stocks" typically refers to a group of stocks that are considered exceptionally strong or promising in terms of investment potential. However, the specific set of stocks referred to as the "Magnificent 7" can vary depending on the context, timeframe, and who is using the term.

In some cases, it could be a reference to a popular or widely recognized group of stocks that are performing well or have strong growth prospects according to analysts or investors at a given time. These stocks could belong to various industries or sectors.
"Magnificent 7" is not a standardized financial term like an index or a specific list maintained by a financial institution. Rather, it's more of a colloquial or informal term used to describe a group of stocks that are collectively seen as noteworthy or outstanding in some way.

Here are a few examples of stocks that have often been in the spotlight due to their performance or market influence (note that this is not an exhaustive or definitive list):

1. Apple (AAPL) - A leading technology company known for its iPhones, iPads, and other consumer electronics.
2. Amazon (AMZN) - The e-commerce giant that has expanded into various other sectors such as cloud computing (AWS) and streaming (Amazon Prime).
3. Microsoft (MSFT) - A major player in software, cloud computing (Azure), and hardware (Surface devices).
4. Alphabet (GOOGL) - The parent company of Google, dominating online search, advertising, and expanding into other technology ventures.
5. Tesla (TSLA) - A pioneer in electric vehicles (EVs), energy storage (Powerwall), and renewable energy solutions.
6. Facebook (Meta) (META) - The social media giant that has expanded into virtual reality (Oculus) and digital advertising.
7. NVIDIA (NVDA) - A leading semiconductor company known for its GPUs (graphics processing units) used in gaming, AI, and data centers.

Magnificent seven stocks got crushed

The "Magnificent 7" stocks dominated headlines throughout 2023 due to their extraordinary performance, propelling the stock market to unprecedented highs. These stocks, comprising some of the largest companies by market capitalization, wielded significant influence over the S&P 500 index.

According to CNBC's analysis, the Magnificent 7 collectively accounted for nearly one-third of the S&P 500's composition at that time. Their movements dictated much of the index's trajectory, amplifying their impact on overall market performance.
While discussion around the Magnificent 7 has subsided somewhat, their pivotal role in driving the S&P 500 to new peaks in 2024 remains undiminished. However, as investor sentiment shifts away from large-cap technology stocks, these companies may now contribute to downward pressure on the index.

Anticipations for earnings among the Magnificent 7 are notably high as we move into the latter half of 2024. Investors are optimistic about Tesla's potential rebound in auto sales, Apple's expected surge in iPhone sales driven by a super cycle, and NVIDIA's anticipated outperformance with its upcoming next-generation Blackwell chips. These companies' upcoming earnings reports are eagerly awaited as they are expected to surpass market expectations, potentially influencing broader market sentiment.

Why Magnificent Seven Stocks Just Had Their Worst Day on Record

On Wednesday, the Magnificent Seven stocks faced a significant downturn following disappointing earnings reports from Tesla (TSLA) and Alphabet (GOOGL), raising concerns about decelerating profit growth among America's tech giants.

The Roundhill Magnificent Seven ETF (MAGS) plummeted 6.1% on Wednesday, marking its largest single-day decline since its inception in April 2023. This sharp decline pushed the index into correction territory.

These tech giants, collectively valued at approximately $16 trillion as of Tuesday's close, exerted substantial downward pressure on major indexes. The S&P 500 recorded its most significant drop since September 2022, losing 128 points, with the Magnificent Seven stocks accounting for approximately 85 of those points.

Disappointing earnings of Tesla and Alphabet

The earnings season began on a challenging note for the group as Tesla fell short of quarterly earnings expectations on Tuesday afternoon. The electric vehicle manufacturer reported a 45% drop in profit, citing higher costs related to artificial intelligence (AI) development and lower average vehicle sales prices. Following the earnings report, Tesla's shares plummeted over 12% on Wednesday as investors analyzed the results and took into account delays in the rollout of its robotaxi initiative.

Nvidia Stock Leads Magnificent Seven

Nvidia's stock experienced a sharp decline of 6.7% on Wednesday, dropping below its 50-day moving average line, a crucial technical indicator to monitor. A breach of this level accompanied by heavy trading volume would typically signal a sell-off, whereas a strong rebound would indicate a potential new buying opportunity.

In preceding weeks, Nvidia had seen a significant rise following its surpassing of Wall Street's expectations for its fiscal first quarter. Additionally, the company provided optimistic guidance for the current period. Nvidia also implemented a 10-for-1 stock split effective from June 10, further impacting its stock performance.

Apple and Microsoft stock moved down

Today, shares of Apple (AAPL) and Microsoft (MSFT) declined in trading.
Apple's stock fell by 2.9% on Wednesday, remaining above the buy range following a 199.62 entry point. Earlier this month, Apple reached a record high on July 15.

In early May, Apple slightly exceeded Wall Street's expectations for its fiscal second quarter. The tech giant also announced increases to its quarterly dividend and stock buyback program.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.