The stock market couldn’t have hoped for a much better inflation report, so why is the S&P 500 down? Traders appeared to be selling the stocks that pushed the index to record highs and buying many of the market laggards.
The Magnificent Seven group of megacap technology stocks were almost all down in recent trading; Nvidia was down 3.2%; Meta Platforms was down 2.3%; Microsoft was down 2%; Alphabet was down 1.6%; Amazon.com was down 1.4%; while Apple was down 1.5%. Tesla was the only member of the group up, with a gain of 1.1%.
With the S&P 500 down 0.3%, a whopping 410 of its members were rising on the day. The Invesco S&P 500 Equal Weight ETF, a proxy for index breadth since each member stock is weighed the same, was up 1.2%. That’s the kind of staggering breadth that you’d expect to push the market higher. The Russell 2000 was up 2.7%, on track for its best day of the year.
With bond yields sliding, rate-sensitive sectors were shining. The S&P 500 real estate sector was up 2.6%, while utilities were up 1.6%. Materials were up 1.1%. The only sectors declining were information technology, communication services, and consumer staples, down 1.5%, 1.4%, and 0.7%, respectively.
Though other stocks are picking up the slack as the Mag 7 slid, the relative weight of the megacap tech stocks has clouded what could have been a strong day of gains.