A rally in U.S. equities on Friday pushed a basket tracking the so-called Magnificent Seven stocks toward a record, right before an important week of earnings for the high-flying group.
Bloomberg’s gauge for the Magnificent Seven megacap tech names was up 0.8% at 1:35 p.m. in New York on Friday, headed for its highest level since December.
The S&P 500 Index advanced 0.5%, putting the benchmark on track for another closing record and its fifth-straight session of gains. The tech-heavy Nasdaq 100 Index climbed 0.4%.
Two members of the Magnificent Seven reported earnings last week, with stronger-than-expected results for Alphabet Inc. taking the sting off a gloomy outlook from electric vehicle maker Tesla Inc.
Investor focus now turns to this week, when Apple Inc., Amazon.com Inc., Microsoft Corp. and Meta Platforms Inc. are all expected to report.
Chipmaker Nvidia Corp., which has outperformed the other megacaps with a 30% year-to-date gain as of Thursday’s close, reports at the end of August.
“From an earnings perspective, the Magnificent 7 is a standout, with growth expected to be nearly triple that of the rest of the S&P 500,” said Nationwide’s Mark Hackett.
Notable movers at the end of a busy earnings week included Deckers Outdoor Corp., with the footwear company jumping as Ugg boots and Hoka running shoes saw big sales gains.
On the flipside, Intel Corp. slumped as concern over the chipmaker’s chief executive officer Lip-Bu Tan prioritizing cost cutting over restoring the company’s technological edge weighed on the stock.
Tech Test
Stocks have been buoyed by stronger-than-expected corporate earnings, as companies head for their highest share of beats since the second quarter of 2021. Investors will be watching this week’s results for evidence that the megacap tech companies can justify their often lofty valuations.
“AI spending, cloud demand and digital advertising among the key themes for earnings season for the big tech names that underpin the market’s recent run of all-time highs,” said Saxo Bank’s Neil Wilson. “Given the concentration in the Mag 7, these numbers are going to be crucial for the market as a whole.”
Traders are also tracking developments in President Donald Trump’s ongoing feud with Federal Reserve Chair Jerome Powell.
Following a tour that saw both men trade barbs over the cost of the central bank’s now-controversial renovation project, Trump maintained that there was “no tension” with the central bank chief, and indicated the problems with the project were not enough to fire him.
Meanwhile, Bank of America Corp. strategists led by Michael Hartnett warned the risk of a bubble in stock markets is rising as monetary policy loosens alongside an easing in financial regulation.
“Bigger retail, bigger liquidity, bigger volatility, bigger bubble,” Hartnett wrote in a note.
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