'Magnificent Seven' profit lag: How the rest of the stock market may outpace tech giants this earnings season
The third-quarter earnings season introduces a shift where the profit growth of the Magnificent Seven tech giants is projected to fall behind the rest of the S&P 500 for the first time this year. Analysts at Russell Investments forecast that the broader index will achieve faster profit expansion than the big tech group, potentially prompting a wider market rally after a period of narrow breadth. While the tech stars approach a combined market capitalization of twenty-five trillion dollars and saw record inflows into exchange-traded funds in September, most of the group trails the broader market.
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- ✓ Russell Investments projects that the broader S&P 500 index will achieve faster profit growth than the Magnificent Seven in the third quarter.
- ✓ The Magnificent Seven are projected to grow third-quarter earnings more slowly than the rest of the S&P 500 for the first time this year.
- ✓ Russell Investments forecasts that the Magnificent Seven's third-quarter net profit will increase 20.3 percent year-over-year.
- ✓ The S&P 500 is back in record territory.
What changed
Russell Investments projected that the third-quarter net profit for the Magnificent Seven will increase twenty point three percent year-over-year, lagging behind the broader market.
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Magnificent Seven Profits Lag Broader Market for First Time
The third-quarter earnings season introduces a shift where the profit growth of the Magnificent Seven tech giants is projected to fall behind the rest of the S&P 500 for the first time this year. Analysts at Russell Investments forecast that the broader index will achieve faster profit expansion than the big tech group, potentially prompting a wider market rally after a period of narrow breadth. While the tech stars approach a combined market capitalization of twenty-five trillion dollars and saw record inflows into exchange-traded funds in September, most of the group trails the broader market.
Why it matters
The broader S&P 500 index has returned to record territory, driven largely by past momentum in the largest tech names. September brought the biggest monthly inflow on record for Magnificent Seven exchange-traded funds, and Nvidia continues to near a six trillion dollar market value. However, analysts suggest that improving results across other sectors could finally broaden the market rally as reporting season gets underway.
What is confirmed
- Russell Investments projects that the broader S&P 500 index will achieve faster profit growth than the Magnificent Seven in the third quarter.
- The Magnificent Seven are projected to grow third-quarter earnings more slowly than the rest of the S&P 500 for the first time this year.
- Russell Investments forecasts that the Magnificent Seven's third-quarter net profit will increase 20.3 percent year-over-year.
- The S&P 500 is back in record territory.
- September brought the biggest monthly inflow on record for Mag 7 ETFs.
Still unconfirmed
- Amazon has tremendous growth opportunities in artificial intelligence that do not appear to be priced into its valuation.
- Betting against the Magnificent Seven looks like a losing trade because tech is still running hot.
What to watch next
- Third-quarter earnings reports and results rolling in during the reporting season.
- Further market breadth indicators to see if the stock market rally broadens out beyond big tech.
confidence 90%Sources used for this update (13)
- www.cnbc.com — How the rest of the stock market may outpace tech giants this earnings season
- CNBC — 'Magnificent Seven' profit lag: How the rest of the stock market may outpace tech giants this earnings season
- MarketWatch — The S&P 500 is back in record territory as the ‘Magnificent Seven’ ride to the rescue
- The Motley Fool — 2 Magnificent Seven Stocks to Buy and Hold for the Rest of the Decade
- Seeking Alpha — September brings the biggest monthly inflow on record for Mag 7 ETFs
- WSJ — Tech Stars’ Market Cap Approaches $25 Trillion
- finance.yahoo.com — Mag Seven Q3 Earnings Seen Underperforming Broader Market ...
- primexbt.com — ‘Magnificent Seven’ earnings growth set to lag the rest of ...
- www.isabelnet.com — Earnings Growth – Mag 7 and S&P 500 ex-Mag 7 – ISABELNET
- www.fool.com — This "Magnificent Seven" Stock Could Be Overdue for a Big ...
- www.gate.com — Magnificent 7 Profit Growth Lags S&P 500 in Q3, Russell ...
- walletinvestor.com — Nvidia nears $6 trillion market value as the rest of the ...
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