Sun, June 30, 2024 at 10:23

• 

  Kang-hoon

  • Hello Annie, today I want to discuss the recent performance of the 'Magnificent Seven' tech stocks and their impact on the market.

  • 
• Annie

  • Hi Kang-hoon!😊 That sounds interesting.

  • What exactly happened?

  
• 

  Kang-hoon

  • The market capitalization of the 'Magnificent Seven'—Amazon, Nvidia, Apple, Microsoft, Alphabet, Tesla, and MetaPlatforms—has risen to over $5 trillion.

  • This accounts for a significant portion of the S&P 500's gains this year.

• Annie

  • Wow, that's huge!

  • But why are they called the 'Magnificent Seven'?

  
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• 

  Kang-hoon

  • They are referred to as the 'Magnificent Seven' because these seven companies have been the primary drivers of the market's growth, contributing about 60% of the S&P 500's gains in the first half of the year.

• Annie

  • I see.

  • So, which company contributed the most?

  
• 

  Kang-hoon

  • Nvidia was the standout performer, contributing 31% of the gains with a remarkable 150% increase in its stock price.

• Annie

  • That's impressive!

  • But is this dominance by tech stocks a good thing for the market?

  
• 

  Kang-hoon

  • While the gains are impressive, there are growing concerns.

  • 

  • The market's heavy reliance on a few tech stocks creates an imbalance.

  • For example, when the S&P 500 is unweighted by company size, it gained only 4% in the first half of the year and actually fell in the second quarter.

• Annie

  • Hmm, that sounds risky.

  • Are there any bearish signals we should be aware of?

  
• 

  Kang-hoon

  • Yes, Kevin Gordon from Charles Schwab mentioned that there are growing bearish signals beneath the surface of the market.

  • Additionally, some investors believe that tech stocks that haven't performed as well might catch up, but this is speculative.

• Annie

  • So, what about other sectors?

  • How did they perform?

  
• 

  Kang-hoon

  • Other sectors like utilities and communications services also saw gains, up 7.6% and 26% respectively.

  • However, the real estate sector was the only negative performer, impacted by higher interest rates.

• Annie

  • Interesting.

  • And how did the global markets fare?

  
• 

  Kang-hoon

  • Global financial markets have been unstable.

  • For instance, the Japanese yen hit its lowest value against the dollar in over 37 years, and cocoa prices surged by 85%.

  • Additionally, French bond risk increased significantly ahead of their general election.

• Annie

  • That's quite a mix of news.

  • What about the US presidential election?

  • Any impact there?

  
• 

  Kang-hoon

  • Uncertainty around the US presidential election has increased, especially after last week's debate.

  • This has added to the market's volatility.

• Annie

  • And what about the UK general election?

  
• 

  Kang-hoon

  • The UK general election on July 4 is expected to bring the Labour party to power for the first time in 14 years.

  • However, it's not expected to have a major impact on the markets.

• Annie

  • Got it.

  • So, overall, would you say this news is good or bad for the market?

  
• 

  Kang-hoon

  • Overall, I would consider this news to be a negative indicator.

  • The market's heavy reliance on a few tech stocks and the growing bearish signals suggest potential instability.

  • Investors should be cautious moving forward.

• Annie

  • Thank you for the detailed explanation, Kang-hoon.

  • This has been very insightful.😊

  
• 

  Kang-hoon

  • You're welcome, Annie.

  • Always happy to help.

  • Stay informed and invest wisely.

  • Upon comprehensive consideration, this news is perceived as a 😱Bearish.