00:00 Speaker a
Let’s sign in with NVIDIA shares in public, although it turned upward today after CEO Jensen Huang’s keynote speech, despite the increasing milder reaction, which turned the entire seven trades into a huge seven trade in general. Stocks saw their worst start in two years, and all members were officially in negative territory as Meta became the red of the latest year. Join us now and break down what this means for the broader market, and we have Josh Shafer, our market reporter, Josh. A big question, can the market recover without MAG 7 recovery?
00:27 Josh Shafer
I don’t think most people will argue, McGrady, right? So, you look at the MAG 7 compared to this year’s S&P 500. Its highest S&P 500 since the end of 2022 is S&P 500. Of course, this is the end of the last bare market, right? That is indeed a large-scale hat technology sell-off. And I think the equation here is, we’ve talked about how these seven companies are indexed, and they’re so many indexes. When you look at it now, they still have a lot of indexes, right? The seven companies still account for nearly 31% of the S&P 500 market capitalization. Essentially, whether it’s going up or down, these companies will bring you the direction of the market. This is indeed the action we have seen in the past month, right? The MAG 7 has dropped significantly this year. I think about 14% of the total is index. That’s more than the S&P 500, right? So this tells you that the index is dragging it down. Even if you look at something similar to the S&P 500’s equal weight, it won’t be affected by the market cap size, and the right weight equals all stocks. The index fell by only about 4% last month, while the S&P 500 fell by 8%. So, essentially, what I’m talking about is not that everything is not working in this reduction. What doesn’t work is the large CAP technology and is valued on indexing at some point. So if you really want to see the full rebound here, you don’t need them to lead, but you’ll need a little bit of involvement.
02:35 Speaker a
So, what can investors do now? Because I got this quote, just hit my inbox from UBS and say they are the right investors should consider buying quality AI stocks here. Even if some of these AI dramas are not leading, they still have to take consistent actions to enable the rest of the market to truly beneficiaries?
03:06 Josh Shafer
Yes, I mean, I think, Brad, right? You look at these names, many of the names we are talking about here, both on Amazon, Nvidia is down than Amazon, but we put Amazon, Microsoft in a similar box. I also believe Meta is taller than the last 52 weeks, right? Therefore, most of them are their highest level in history. So you look at those shaved stocks and the question is, we’ve been pricing in the revenue growth of these companies, but if they continue to accelerate earnings growth, right? It’s a beat and improves the environment. This has always been a market issue, it has always been a market issue, that is, expectation starts to catch up with where these companies are. But of course you can do that, maybe we returned them too low, there are some buying opportunities there. But your point, CD Scott Kroner told me, he still thinks some of these stocks are defensive because if you are going to get into any economic slowdown, any concerns about the broader environment, where is the earnings growth fairly consistent? This is big hat technology, right? These companies have real revenue, they consistently post profits, and they do share buybacks, most of which have dividends. So, in this place where you might be able to hide isn’t necessarily pure advice, but a little defensive, right? Because again, this is consistent growth for several years. When we talk about the rest of the market, we are talking about hopeful growth, right? We hope that this 493 will continue to accelerate earnings growth. But this is just the current estimate. We don’t necessarily see this.
05:15 Speaker a
And Josh, we still have about a minute left, but how does the Fed participate in this conversation? If we do hear dirty food today, can we provide lifts for all the boats on the market boat?
05:27 Josh Shafer
Yes, it seems to be? By then, Maddie, if you see big hats leading the technology, I wouldn’t be surprised, right? We have seen that at some Fed meetings, stock marketing generals are rallied, but what about the most rallies? It’s Nvidia, right? So it seems like when you are facing emotional risks, especially when you think again, Nvidia is not, not Apple 10 years ago, and when we talk about Apple all day, that’s the market leader, and maybe there are more stocks with boring quotes. Nvidia can have a big day, right? So if you start to see risks, maybe this is the kind of name people start to pile up because again this is a popular retail name. It’s a name that moves a lot and has many different options related to it, something similar. So it would be interesting to see if there is any risk to our rally today, or on the downside, it is risky. Whether technology continues to lead because it has been leading the market in the past few years. So far, it has been leading the market.
06:44 Speaker a
Thank you very much, Josh. We will pay close attention. 2:30, Brad. There are a lot of price action there. Have to wait. Have to wait.
