Is Mag 7 Showing Signs of Weakness?

Jobs disappointed last week and Mag 7 pulled back.

Since peaking on December 17th of last year, Mag 7 stocks have trended lower, overall. In fact, last week alone the heralded 7 stocks were down more than 2.4%. This is probably a healthy thing as valuations had reached extremely elevated levels. Meanwhile, breadth has improved as the number of advancing stocks is at 84% in the S&P 1500 Index. The “January Barometer,” the premise that as January goes, so goes the rest of the year. In fact, January was up more than 2% - going back to 1951, when January is up more than 2%, the S&P 500 finished positive 87% of the time with an average return of 18.4%.

Volatility has been tame for the better part of 2 years, but it’s not realistic to thing that volatility will remain low long-term.

Last week, the market was expecting 170,000 jobs added, but only 143,000 jobs were added in January. What’s more concerning, the Bureau of Labor Statistics issues their revisions for the previous year in February and it wasn’t good for 2024. The Jobs Report on Friday showed that more than 600,000 from last year were revised lower. Regardless, US households have more equity exposure than at any point in the last 70 years at a time when equities are over-valued. If inflation data comes in as expected this week, hopes of another rate cut might help equities move higher.

---

Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

Past Performance does not guarantee future results.