Can we still say "Magnificent Seven"? Or should it be "2 Unlimited "?

The S&P 500 stock market index has performed very well in recent years. This has been largely due to the index’s high exposure to technology stocks – they represent no less than 29.8% of the total S&P 500 – and in practice mainly thanks to the “Magnificent Seven”.

Who are these Magnificent Seven?

• Amazon
• Microsoft
• Alphabet AKA Google
• Apple
• Tesla
• Meta AKA Facebook
• Nvidia

Source: da Chart Life

In 2023, whereas the return on the S&P 500 (earnings + dividends) as a whole was 26.29% in USD terms, these 7 produced an average total return of around 104.70%. Without these 7 shares, the S&P 500 would have only posted a return of 9.94%. That's reason enough for them to be christened "magnificent". But are they all still magnificent?

Since the start of this year, some of these star shares have had to step down from its role (prices as of 12/03/2024 and in USD):

• Apple has lost around 10% since 1 January 2024
• Alphabet is lower by 1%
• The negative outlier is Tesla, with a loss of over 28%

The only ones that can really still be described as magnificent at the moment are Nvidia (+85%) and Meta (+41%).

Does this mean the end of these tech shares' dominance?

In our view it is still too early to say, but diversifying into other US sectors would certainly be worth the effort. For example, we are seeing a strong industrial sector, though it currently only makes up 8.7% of the S&P 500. As a result, the sector’s impact on the performance of the S&P 500 is limited, despite there being some large companies such as General Electric, Boeing and Caterpillar in this sector.