-
It was a good run, but the era of the Magnificent Seven is over for the stock market.
-
The group's fortunes have diverged, with stocks like Nvidia soaring and Tesla tanking.
-
"I don't see these seven names rising together," said the analyst who coined the nickname for the group.
The Magnificent Seven are looking a little less magnificent, and aren't really even a band of seven anymore.
Their diverging fortunes this year might mark the end of an era for the stock market, according to the analyst who coined the nickname for the group of mega-cap giants.
In a note titled "R.I.P the Magnificent Seven Era," Mike O'Rourke, chief market strategist from Jones Trading, said the group's dominance over the stock market is coming to a close.
Back in April 2023, when O'Rourke invented the moniker (although some say it was BofA's Michael Hartnett who coined the term), the Magnificent Seven contributed to a stunning 88% of year-to-date gains. Today, that grip on the market has loosened.
In January, Michael Hartnett noted that the seven biggest stocks — Apple, Meta Platforms, Nvidia, Tesla, Amazon, and Microsoft — accounted for 45% of the S&P 500's gains. That's still a lot, but it's markedly less than the hold it once had.
Now, with the market rally broadening out, and with stocks within the Magnificent Seven embarking on different trajectories (think Nvidia versus Tesla), it's becoming easier for investors to differentiate between members of the group.
"This big rising tide of seven names lift[ing] all boats in the stock market, is what I see ending," O'Rourke said. "I don't see these seven names rising together."
Diverging fortunes
For one, the Magnificent Seven aren't moving in the same direction anymore.
Take Nvidia, for example. The company has taken off on the AI rocket, its stock flying into the stratosphere, up 66% so far this year. The chipmaker posted a blowout earnings report this week, which swung the share price up 16% in a day, good for the biggest market-cap surge ever.
That spike came just weeks after Meta posted a similar record after its own earnings report boosted the stock 20% in a day.
Those moves are in stark contrast to Tesla's fortunes this year. The stock is down 22% since January amid a cloudier outlook for electric vehicle demand.
Even Apple has struggled since the beginning of 2024, down about 1.45%.
"They're still highly influential in the market," O'Rourke noted. "The difference now is they'll start canceling one another out as far as performance as opposed to all moving in the same direction."