A large drop in the market on Monday sparked fears of a recession. While the stock market has recovered in the days since, investors are factoring concerns of a recession and high valuations for stocks including the Magnificent 7 members.
What Happened: The SPDR S&P 500 ETF Trust SPY, which follows the S&P 500 Index, and the Invesco QQQ Trust QQQ, which tracks the Nasdaq 100 had large drops of 3% due to economic uncertainties and global fears.
With many stocks down on Monday, the Magnificent 7 stocks were also hit and some investors chose to buy the dip on these stocks that have typically outperformed the broad market.
Benzinga asked readers their opinion on the outlook for the Magnificent 7 stocks.
"Which of the following Magnificent 7 stocks do you believe will be best able to weather a recession?" Benzinga asked.
Here are the results:
Amazon.com Inc AMZN: 27%
NVIDIA Corp NVDA: 27%
Microsoft Corp MSFT: 22%
Apple Inc AAPL: 8%
Alphabet Inc GOOGGOOGL: 6%
Tesla Inc TSLA: 6%
Meta Platforms META: 4%
The poll found readers think Amazon and Nvidia are best positioned to weather a potential recession. Amazon is a leader in e-commerce and has its AWS cloud business that has increased revenue and earnings. Nvidia has been a top-performing stock in recent years and is viewed as a leader in artificial intelligence by many.
Ranking close behind the winners was Microsoft, a company that operates in cloud, search, video games, business software and more segments.
Read Also: Tech Stocks Rally After 5-Day Slump As Recession Panic Eases: Nasdaq 100 Movers To Watch Thursday
Why It's Important: While fears of a recession have shrunk in the days since Monday, investors should be aware that August and September are traditionally weak months for the stock market.
Investors could be looking for hedges against market underperformance or for the coming years of growth from trends such as artificial intelligence.
Here's a look at the year-to-date, one-year and five-year performances of the Magnificent 7 stocks as of Aug. 8:
- Apple: +11.0% YTD, +19.5% 1-Year, +320.2% 5-Year
- Microsoft: +7.7% YTD, +22.7% 1-Year, +199.3% 5-Year
- Alphabet: +16.9% YTD, +24.1% 1-Year, +177.7% 5-Year
- Amazon: +9.4% YTD, +16.9% 1-Year, +85.4% 5-Year
- Nvidia: +112.4% YTD, +131.6% 1-Year, +2,557.9% 5-Year
- Meta: +42.9% YTD, +59.7% 1-Year, +165.9% 5-Year
- Tesla: -19.6% YTD, -20.5% 1-Year, +1,184.4% 5-Year
For comparison, the SPDR S&P 500 ETF Trust is up 11.5% year-to-date, up 15.1% over the last year and up 80.5% over the past five years. Only three of the Magnificent 7 stocks are ahead of the SPY year-to-date.
Looking longer-term, six of the seven Magnificent 7 stocks have outperformed the SPY over the past year and all seven have outperformed the SPY over the past five years.
Benzinga recently asked readers if they thought markets would hit new highs in 2024. The poll found that 72% of readers don't think the market has peaked for 2024, suggesting more gains coming in the final four months of the year.
For investors looking for exposure to the Magnificent 7 stocks without having to choose one or two winners, there is the Roundhill Magnificent Seven ETF MAGS, which holds all seven stocks.
The study was conducted by Benzinga on Aug. 6 and Aug. 7, 2024, and included the responses of a diverse population of adults 18 or older. Opting into the survey was completely voluntary, with no incentives offered to potential respondents. The study reflects results from 113 adults.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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