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Rallying without Mag 7

Big Tech sneezed but the rest of the stock market hasn’t caught a cold.

For the first time in years, US equities have climbed while the Magnificent Seven — Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, Tesla — did the opposite. So far in 2025, this batch of mega-cap stocks has been a drag on the S&P 500. 

As of Friday, the S&P 493 is up 4.65% year-to-date. 

Including the Magnificent Seven, the index’s returns drop to 1.3%. Even with the recent rally, those seven stocks are down nearly 5% as a group since January 1.

The message buried in the math runs contrary to the last two years. The rest of the market has done just fine despite a lagging Big Tech cluster.

Utilities, industrials, and financials have led the charge — sectors that usually take a back seat to whatever Nvidia happens to be doing on a given day.

That’s a sharp reversal from 2023 and 2024, when the Magnificent Seven accounted for the majority of the S&P 500’s total return.

Until a couple months ago, artificial intelligence seemed to be the only theme that mattered to markets.

Yet Big Tech has sold off particularly hard since tariff uncertainty has come to dominate the news cycle.

Apple and Nvidia, for instance, both saw more than $1 trillion in market cap erased between February 19 and April 8, according to data from Bespoke Investment.

Those names and the rest of the Magnificent Seven have rebounded this month following the US-China agreement to pause tariffs for 90 days. 

“Big Tech was responsible for all the S&P’s losses in Q1 but did no harm in April and managed to contribute 60 percent of the index’s May-to-date returns,” DataTrek Research strategists said.

There are two ways to read into this trend. The obvious angle is to assume the Magnificent Seven will soon be back in a familiar spot leading the S&P 500.

Recent history and the enormous size of these businesses suggest it’s a good bet.

The more intriguing takeaway, to me, is to wonder whether the rest of the market will continue to wean itself off its dependence on Big Tech.

The year so far has shown that the S&P 493 no longer needs mega-caps to start a rally. 

Suddenly, broader participation — rather than a small handful of names — seems sturdy enough to push the market forward.

Considering how narrow market leadership has been, it’s a shift worth watching. 

And should the trend hold, it could mark the beginnings of a market where gains are built on a broader, less sexy base than Big Tech.

Market snapshot

This out-of-favor AI stock could surge 60%

We interviewed an investor who has returned 100% over the last year to get his highest-conviction stock for the 2025 — and Best Ideas Club members already read the report on Sunday.

Unlock the investment thesis here.

Elsewhere

🤷‍♂️ Scott Bessent shrugged off Moody’s. The agency just downgraded the US’ credit rating from Aaa to Aa1. Yet the Treasury Secretary said “Moody’s is a lagging indicator.” The US is sitting on $36.22 trillion in national debt. (Barron’s)

🛒 President Trump vs. Walmart. The retailer said it would raise prices due to tariffs, with its CFO saying duties remain “too high.” Trump then took to Truth Social to say Walmart should “EAT THE TARIFFS” rather than charging valued customers, noting that he and Walmart shoppers would be “watching.” (CNBC)

📉Fed estimates are changing. After the last week, traders now favor a rate cut in July rather than June, according to CME’s FedWatch Tool. Markets now forecast two quarter-point cuts in 2025, down from three. (Yahoo Finance)

Rapid-fire

• Former President Joe Biden has been diagnosed with metastatic prostate cancer (WSJ)

• Michelle Bowman is Trump’s pick for Fed banking supervisor and banks are cheering so far (Barron’s)

• Asia’s biggest tech show kicks off today in Taipei, which will feature Nvidia prominently (Bloomberg)

• GM is pushing back on California’s EV mandate (WSJ)

• The economy isn’t yet buckling under tariff fears (Opening Bell Daily)

• The pandemic housing boom vs. the 2025 market as told by 2 charts (ResiClub)

• Take the red pill of finance (and memes)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at phil@openingbellmedia.com.