- The so-called magnificent seven technology companies that have powered this year’s US stock rally are posting disappointing earnings, wiping about $200 billion off their market value and threatening to push the S&P 500 into a correction.
Alphabet, Tesla, and Meta Platforms have all slumped since reporting, with Microsoft the only bright spot. Apple and Nvidia are due to report next month.
Why it matters
The seven companies have been the story of the year in the stock market, with a frenzy of interest around artificial intelligence fueling gains for many of them. The S&P 500 has fallen 8.8% from its 2023 peak, putting it within reach of the 10% drop that’s defined as a correction in a bull market. Yet there’s still plenty of euphoria left. The tech-heavy Nasdaq 100 Index, dominated by the Magnificent Seven, remains up 31% for the year, meaning there’s plenty of room for the market to fall.