Magnificent 7 Stocks Carry Market as in 2023
The "Magnificent 7" tech stocks have reversed an early-year underperformance. The group is once again driving market gains after lagging for most of the year.
The large technology companies known as the "Magnificent 7" have reclaimed the stock market's steering wheel after a sluggish start to the year. The group spent most of the year losing money for investors while the rest of the S&P 500 index climbed without them.
However, this trend reversed starting in August, with the mega-cap tech stocks quickly closing the gap. The Roundhill Magnificent 7 ETF (MAGS) had fallen as much as 16 percent six months prior, while the ex-Mag 7 large-cap benchmark (XMAG) saw a maximum decline of only 4 percent.
The Magnificent 7 group now accounts for approximately one-third of the S&P 500's total market value. If the year were to end today, it would mark the first time since 2022 that the group has underperformed the S&P 500. Furthermore, 2026 would be the first year the group has trailed the index during a period of overall market growth.
Equal-weight investing had been considered a prudent hedge against concentration risk in June. Three months later, however, the index is once again relying on the same seven stocks that previously propelled market gains following the pandemic.