The Magnificent Seven Panic Is Over and We Survived
Investors were worried that this year’s market rally was fueled by a small handful of stocks. That’s changed suddenly — and without much drama.
The panic over market breadth has gone away.
Photographer: Spencer Platt/Getty Images North AmericaFor the better part of 2024, market commentators have bemoaned the fact that a few mega-capitalization stocks, dubbed the Magnificent Seven, appeared to be carrying the entire US market. To permabears, this “narrow breadth,” as market practitioners call it, was proof positive that there was something wrong with the market, not their forecasting abilities. Fortunately, the Great Breadth Panic of 2024 seems to be ending in benign fashion, and the development may well provide some comfort to future generations of breadth doomers.
Consider recent developments. Since the market started shifting on July 9, Bloomberg’s Magnificent Seven index of Microsoft Corp., Apple Inc., Nvidia Corp., Amazon.com Inc., Meta Platforms Inc., Tesla Inc. and Alphabet Inc. has dropped more than 6%. The equal-weighted version of the S&P 500 Index has outperformed the cap-weighted version in that time, and small-capitalization stocks have done even better. That’s great for the folks who have been betting on the Russell 2000, but they’re still underperforming large caps by a wide margin since 2022.