May 30, 2024
Stock Market

Magnificent Seven shed $233 billion in market cap, dragging down stock market


It has been a not-so magnificent Tuesday.

The “Magnificent Seven” group of technology companies that have helped underpin the stock-market rally for months shed a combined $233 billion in market capitalization on Tuesday, fueling a rout in U.S. equities.

Apple Inc.

AAPL

shares lost 2.8% on Tuesday, while Amazon.com Inc.

AMZN

declined almost 2%. Shares of Microsoft Corp.

MSFT

fell 3%, while those of Google parent Alphabet Inc.

GOOG


GOOGL

,
Meta Platforms Inc.

META

and Tesla Inc.

TSLA

dropped 0.5%, 1.6% and 3.9%, respectively.

Out of the group of seven popular tech stocks, only Nvidia Corp

NVDA

ended higher Tuesday, tacking on 0.9%.

Tuesday’s retreat marked the third-largest daily loss in market cap for the Magnificent Seven group this year, with the largest one-day rout being the $375 billion reversal logged on Jan. 31, according to Dow Jones Market Data.

“We are in the midst of a pullback,” said Peter Cardillo, chief market strategist at Spartan Capital Securities. “How far we go down depends. If there is a curveball by Powell tomorrow and employment numbers are stronger than expectations, than the Ides of March are upon us.”

Cardillo was referring to William Shakespeare’s warning of a bloody betrayal of Julius Caesar in his famous play, with the Ides of March, popularly believed to occur around March 15. The date also tends to be closely watched on Wall Street for signs of trouble.

More immediately, Fed Chairman Jerome Powell is scheduled to kick off two days of congressional testimony on Wednesday, with investors anxious to hear more about the central bank’s plans to eventually pivot to rate cuts.

Investors have dialed back the expected timing and magnitude of potential rate cuts this year, after Fed officials said they were in no hurry to be early or aggressive with reversing its policies of higher interest rates, with inflation still running above the central bank’s 2% yearly target.

“This isn’t some panic selling,” said Michael Sansoterra, chief investment officers at Silvant Capital Management, which focuses on shares of large-cap and U.S. small-cap companies. With stocks recently hitting a series of fresh records, he said the pullback by companies driving the “narrow leadership” in stocks isn’t surprising.

“This is just normal market movements in what has been a strong bull market year to date,” Sansoterra said.

The Dow Jones Industrial Average
DJIA
fell 404 points, or 1%, on Tuesday, while the S&P 500 index
SPX
shed 1% and the Nasdaq Composite Index
COMP
closed 1.7% lower.

Friday also will bring a closely watched update on the jobs market for February. The labor market and economy have remained surprisingly resilient, even with the Fed’s short-term policy rate pinned to a 22-year high as part of its inflation fight.



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