| | Two Sectors Stand Out in a Divided Market
by Brandon Chapman, CMT
One of my biggest themes heading into 2025 was that Magnificent Seven stocks would lag the market. Their heyday was marked by massive Fed and U.S. government stimulus, shutdowns and closures, and they generally benefited from conditions brought on by the COVID pandemic. | The new administration seems to mark the end of that mindset as debt and deficits exploded. With austerity measures expected, it only makes sense that these companies' earnings growth would moderate. | If that's the case, what impact would that have on the market as a whole? | The issue for the S&P 500 is that these stocks account for much of the weight by market cap of the index. | If they are experiencing any sort of reversion toward their historical valuations, this puts long odds on the S&P 500's performance coming close to anything like we've been used to in the past couple years. | They led the market higher… and now they are a total drag. Here's what to do about it… |
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