Magnificent 7 still motors the market, says LPL strategist

investmentnews.com:

The so-called Magnificent 7, save Tesla, have lived up to their billing so far this year, showing that despite all this talk of market rotation, mega-cap tech stocks are not giving up the mantle of market leadership so easily.

And nor should they, says Quincy Krosby, chief global strategist at LPL Financial.

“The big seven names are strong,” said Krosby. “They have very little debt. They’ve got rock solid balance sheets. And when the market is concerned about the economic backdrop, the money flows right into those names because they have become, in essence, a defensive block of names.”

And there’s more, according to Krosby.

“They make money. They’ve got good management. Their footprint globally is strong and money flows in there,” added Krosby.

The S&P 500 as a whole is up 14 percent this year so its clear that the Magnificent 7 are driving the bus. Or at least 6 of them are.

For those scoring the Mag 7 at home, Alphabet (Ticker: GOOGL) is up 21 percent, Amazon.com (Ticker: AMZN), up 20 percent, Apple (Ticker: AAPL) up 17 percent, Meta (Ticker: META) up 31 percent, Microsoft (Ticker: MSFT) up 13 percent, Nvidia (Ticker: NVDA) up 133 percent and Tesla (Ticker: TSLA) down 11 percent.

Market strategists, of course, have been waiting for – if not cheering for – a rotation into small caps, believing that it is the best way to prolong the bull run. Krosby generally agrees that a broadening of the rally is healthy for the market overall, but does not see the shift from large to small as entirely risk free. For the record, the Russell 2000 is up 10 percent in 2024 after its recent surge.  

“Let’s remember that the Russell 2000, in terms of its risk profile, is riskier than the S&P 500. It has a more volatile profile,” said