America’s Magnificent Seven Stocks Drop 5% in a Week: The American financial markets experienced a turbulent week,
with major company stocks suffering significant losses.
Investors eagerly await the earnings reports of technology giants at a critical time for Wall Street.
Contents
Performance of the Technology Sector
Earnings Season
Performance of the Magnificent Seven
CrowdStrike Crisis
Analysts Expectations
Investment Funds
Additional Analyses
Future Outlook
Performance of the Technology Sector
Technology companies led the losses in the “Standard & Poor’s 500” index,
heading towards its worst weekly performance since last April.
This period saw investors reducing their holdings of the winning stocks of 2024,
with expectations of market gains extending beyond the major companies due to the Federal Reserve’s interest rate cuts.
Earnings Season
Glenn Smith of GDS Wealth Management said, “Next week is crucial for the short-term trajectory of stock earnings,
as many giant technology companies will release their earnings reports.
A strong mix of high-tech earnings and declining inflation could turn the recent market downturn into a new phase of stock rallying.
Performance of the “Magnificent Seven”
The “Magnificent Seven” group of giant companies ended the trading week with a 5% decline.
The losses were more pronounced in chip manufacturing companies,
with an index closely following the performance of companies like Nvidia and Intel dropping by 8.5%.
Despite investors pulling back from rotational trading, small companies rose by about 2% during this period.
CrowdStrike Crisis
Markets saw the collapse of Microsoft’s Windows systems globally
due to a failed software update by Crowd-Strike Holdings, a cybersecurity firm.
The “Standard & Poor’s 500” index dropped to around 5,500 points, the tech-heavy Nasdaq 100 fell by 1%,
and the Russell 2000 index of small companies declined by 0.5% after resuming trading.
Analysts Expectations
Strategists at Goldman Sachs expect the market to experience a corrective movement this summer due to weak economic data,
more cautious central bank expectations, and escalating political uncertainty ahead of the upcoming U.S. presidential elections.
Investment Funds
According to a team of analysts led by Michael Hartnett from Bank of America,
U.S. equity investment funds attracted about $45 billion in the week ending last Wednesday.
Small-cap funds received $9.9 billion of the invested funds, while large-cap funds gained $27.4 billion.
Additional Analyses
Hartnett mentioned that stocks might drop after the Federal Reserve cuts interest rates,
considering it a “buy on rumor, sell on fact” opportunity.
His team is also optimistic about bonds,
expect any new tariffs Trump imposes in the next 12 months to have a more deflationary than inflationary impact.
Future Outlook
Hedge funds, known as “smart money,” are preparing for the repercussions of the upcoming presidential election campaign.
They maintain cash liquidity and are ready for immediate deployment when stock volatility intensifies and prices fluctuate.
America’s Magnificent Seven Stocks Drop 5% in a Week.
