The stock market’s magnificent seven is now the fab four

livemint.com:

The Magnificent Seven trade is beginning to fizzle—and yet, the stock market is still heading higher. The S&P 500 climbed 10% in the first quarter, its best start to a year since 2019, even though two of its biggest constituents suffered double-digit declines. Apple shares fell 11% in the first three months of the year, while Tesla dropped almost 30%.

Alphabet shares sputtered for much of the period before making a run in the past three weeks and ending up 8%. The other four big tech stocks in the group known as the Magnificent Seven—Nvidia, Meta Platforms, Microsoft, Amazon.com—continued their meteoric run and outpaced the broader market. Some market strategists have dubbed them the new Fab Four.

Some investors say it is a bullish signal that the market is still rallying without the likes of Apple and Tesla because it means other groups are taking part. All of the S&P 500’s sectors, except real estate, logged gains in the first quarter. Small-caps, industrial and financial-services stocks are among those that jumped, fueling bets that the broader market might have more room to run.

Much of the enthusiasm is tied to hopes that the economy has escaped a deep recession and that the Federal Reserve will soon pivot to cutting interest rates, even if not at the pace some investors had previously hoped. A frenzy over the future of artificial intelligence has added to the zeal. “If you’d have told me eight weeks ago that Apple and Tesla would be down as much as they are, oh and by the way, you’re punting when you’re going to do the rate cuts and you’re getting less rate cuts, I would have assumed the market would be down," said Ryan Detrick, chief market strategist at Carson Group.