The Magnificent Seven—a nickname for the highest-flying tech stocks—have lately been buoying the S&P 500. Fun cowboy name aside, the stocks’ outsized impact on the market is raising eyebrows, Lora Kelley wrote for The Atlantic.
When the S&P 500 hit an all-time high last month, it was largely due to the “Magnificent Seven” basket of tech stocks comprising Meta, Alphabet, Apple, Amazon, Microsoft, Tesla, and the chipmaker Nvidia.
The lyrics of The Clash’s great song “The Magnificent Seven” portray a worker schlepping through his seven-hour workday, waiting to be set free for lunch and then for a drink at the pub.
The song provides an amusing commentary on the drudgeries of life under capitalism, with references to Friedrich Engels and Karl Marx.
When the S&P 500 hit an all-time high last month, it was largely due to the “Magnificent Seven” basket of tech stocks comprising Meta, Alphabet, Apple, Amazon, Microsoft, Tesla, and the chipmaker Nvidia.
As The Wall Street Journal wrote in December: “It’s the Magnificent Seven’s Market. The Other Stocks Are Just Living in It.”
Michael Hartnett, the chief investment strategist for Bank of America, reportedly coined the term in reference to the 1960 film The Magnificent Seven, a Western-style remake of Akira Kurosawa’s 1954 film, Seven Samurai. (The Clash song alludes to the 1960 cowboy film as well.)
The Magnificent Seven are disproportionately impacting the market: As Joe Rennison noted in the New York Times, these stocks drove about 60% of the index’s 23% growth last year, buoying the S&P 500.
The index would have risen just 15 percent without the seven tech stocks.
Major market concentration can spell risk. Hartnett recalled to NPR in late 2023 that another time a splashy bunch of tech stocks—then coined the “Four Horsemen,” referring to Dell, Cisco, Microsoft, and Intel—dominated the stock market was just before the dot-com bubble burst.
Some analysts, including Hartnett, worry that overreliance on a small group of stocks could lead to a downturn if these companies fail or prove overvalued.
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