All good things must end. I’m Phil Rosen, reporting from New York. It’s the final edition of 10 things before the opening bell.
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For one last time, let’s get to the news.
1. Have you heard of the Magnificent Seven? No, not the 1960 western movie (or its 2016 remake) – but the most market-dominant stocks that analysts keep flattering.
I don’t blame them. The market’s list of top performers is a veritable who’s who of household names: Nvidia, Tesla, Alphabet, Apple, Meta, Microsoft and Amazon.
This handful of Big Tech stocks accounted for nearly all of the market’s gains in 2023.
Nvidia, for its part, hit a trillion-dollar valuation for the first time last month, and Tesla has seen a meteoric rise of 137% this year.
Apple, Microsoft, Alphabet and Amazon all soared between 35% and 55%, with Apple poised to become the first-ever company to hit a $3 trillion valuation.
The names that make up the so-called Magnificent Seven are now the seven largest stocks listed in the United States.
But some strategists think that’s not necessarily good news.
“When there’s a small group of leaders, there’s a big risk if something bad happens to the technology,” Minerva Analysis founder Kathleen Brooks recently told Insider.
If interest rates rise even higher, she warned, then growth stocks like these could start to fall.
John Hussman, Chairman of Hussman Investment Trust who called the stock market crash of 2008, wrote in a recent note that the narrow, tech-driven bias for the recent rally means big losses are ahead.
“If you want my take on the bull/bear debate,” Hussman said, “which will change as market conditions change, I feel the current market advance is a narrow and selective speculative blow. – a bear market rally driven by fear of missing the recovery of a bubble that is actually at the beginning of its collapse – and that the equity market is likely to suffer heavy losses during the completion of the cycle of full market.”
Are you buying or selling the Magnificent Seven? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.
In other news:
2. U.S. stock futures rise early Friday, as investors brace for data on personal consumption spending, a key indicator of inflation. Discover the latest market movements.
3. Earnings on deck: Heiwado Co, Record PLC, and more, all reports.
4. Goldman Sachs expects small cap stocks to outperform the S&P 500 over the next year. During this period, the Russell 2000 could generate returns of around 14% – here’s how investors can capture this advantage.
5. Costco pulls a page from Netflix’s playbook and cracks down on shared membership cards. Wall Street is thrilled – here’s why.
6. China’s economic recovery appears to be “doomed”, according to think tank experts. Chinese President Xi Jinping is likely to back down from his consumption-led growth plans as moving away from an investment-led approach could trigger backlash.
7. The labor market has been more resilient than expected, but Americans still feel bad about the economy. Over the past three years, unemployment has had much less of a hold on optimism. Everyone has instead focused on the impact of inflation on wages.
8. Stocks are about to suffer heavy losses, according to a notorious bear who called the crashes of 2000 and 2008. He expects a sharp sell-off as valuations hover near historical extremes. For him, the current rally is far too niche and speculative.
9. This batch of low-risk stocks is expected to nearly triple the gains of the S&P 500 over the next year. Goldman Sachs strategists have argued for names they believe will have low volatility and high returns. Here is the full list of 39.
10. Sure, Apple is a great company, but there’s actually not much pushing it toward a $3 trillion valuation. At least that’s what Sarah Kunst of Cleo Capital said. In his view, fundamentals aren’t what’s fueling his latest rally.
Organized by Phil Rosen in New York. Feedback or tips? Tweeter @philrosenn or email prosen@insider.com.
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.
Read the original article on Business Insider