Not so magnificent
Just as it looked like the Magnificent Seven US tech stocks “could keep riding into the sunset forever, the stock market changed the story”, said Brian Swint in Barron’s. In a dramatic shift, Alphabet, Apple, Amazon, Meta, Microsoft, Nvidia and Tesla “got hammered” last week, even though the earnings outlook for almost all is “still strong”. The beneficiaries have been “a bunch of smaller, little-known stocks”. There are three main reasons for this violent rotation. First, “the nagging thought” that maybe AI-boosted valuations have become “a little stretched”. Secondly, the prospect of imminent Federal Reserve interest rate cuts, which make “the rest of the market more attractive”. Thirdly, “political rhetoric”. Donald Trump’s aggressive remarks about the Taiwanese chip industry were “really bad for most of tech, as…