Here’s what to take away from today’s Morning Brief, which you can register to receive every morning in your mailbox accompanied by:
Tesla (TSLA) stole the show this week, marking its biggest day in more than a decade on Thursday as investors cheered the company’s quarterly results with a flurry of buying.
A 22% surge that day put the stock back in the green for the year, up nearly 7% now after lagging its “Magnificent Seven” peers — and at one point in April, down nearly 43% since the start of the new year.
This means that for the first time since September, all seven Magnificents are back in the green, as our chart for the week shows. And if there is a chart that encompasses the history of the stock market in 2024, this one remains a good candidate. The more you look at it, the more thoughts arise.
For example, amid the euphoria of Tesla’s comeback story, its 2024 arc is still tragic – lagging behind its peers as a distant laggard despite the week’s gains.
Zooming in further, the differences between the stocks of big tech companies continue to be stark, causing questions to bubble over whether Tesla belongs to this informal – but important – cohort of potential replacement candidates, such as former member of the FAANG Netflix (NFLX), up 63% so far. year.
Perhaps the most important line in this chart is the benchmark: who is above and who is not. While Nvidia’s (NVDA) outsized returns have distanced itself from the rest of Big Tech, only two others have even managed to outperform the S&P 500 this year as investors look to other sectors.
Nvidia, of course, is responsible for much of this. When Nvidia moves, the S&P 500 usually moves too. But between the Meta line (META) and the S&P’s 23% benchmark are about 150 companies – 30% of the index – that are pulling the index higher as they benefit from the broadening and market rotation.
Given that the smoothed future trajectory of stocks is likely to continue up and to the right, one story to watch for 2025 is exactly where the S&P 500 line will be on this chart and which companies can outperform it. As DataTrek’s Nicolas Colas wrote this week, this is where the rubber meets the road for economics and the Mercenary Seven.
“If US GDP growth is estimated to reach +3% in 2025, then the S&P 493 is probably the best bet,” writes Colas. “Our own view is that growth will be more modest, giving Big Tech the advantage. »
Ethan Wolff-Mann is an editor at Yahoo Finance, where he publishes newsletters. Follow him on @ewolffmann.
