Surging bond yields and mixed earnings reports have weighed on the so-called Magnificent Seven stocks, which are collectively down an average of about 15% from their 52-week highs, though they all still sit on hefty gains for the year.
Because the Magnificent Seven have a combined weighting of 28% in the S&P 500, their performance holds a large sway over the broader index. The S&P 500 has fallen 9% from its 2023 high reached in late July, though it is still up just over 9% year-to-date. Whether the dip buyers are right will hinge in part on the trajectory of Treasury yields, which have risen to 16-year highs on fiscal worries and expectations that the Federal Reserve will need to keep interest rates higher for longer in order to decisively defeat inflation. The Fed will conclude its latest monetary policy meeting on Wednesday.
"Unfortunately, because interest rates are high and we have a war in the Middle East, pretty good is just not good enough,” said Jay Hatfield, CEO of InfraCap. "The bar is extraordinarily high to have a real beat."
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