Monday’s Stock Market Shake-Up: Unusual and Extraordinary

Doubts are emerging on Wall Street regarding the enduring appeal of the once-praised “Magnificent Seven.” An intriguing development unfolded in the U.S. stock market on Monday, triggering speculation and prompting concerns about the future trajectory of market leadership.

Despite all three major U.S. equity indexes achieving fresh 52-week highs, with the Dow Jones Industrial Average reaching its highest level in almost two years, none of the “Mag 7” tech giants managed to close in positive territory. Each member of this elite group of megacap technology stocks concluded the session significantly lower, except for Microsoft Corp.

This occurrence is highly atypical. The Nasdaq seldom finishes higher without contributions from its heavily weighted stocks. According to Dow Jones Market Data, Monday’s session marked only the second time since Meta Platforms Inc.’s market debut in 2012 that the Nasdaq-100 finished in the green while all seven “Mag 7” stocks closed in the red. The last instance was on November 9, 2016, following Donald Trump’s surprising victory in the U.S. presidential election.

The PHLX Semiconductor Index, a pivotal gauge of the semiconductor industry’s performance, achieved a new record closing high on Monday without support from Nvidia Corp., an artificial intelligence juggernaut that has experienced a remarkable sales surge and a share price increase of over 200% this year.

Market strategists find the current situation notable, especially as the year-end approaches. Investors are contemplating who the new leaders in the stock market might be in 2024 after a year dominated by just seven stocks. Steve Sosnick, Chief Market Strategist at Interactive Brokers, emphasized the unsustainability of a market where a handful of stocks lead everything, expressing hope that other S&P 500 members would catch up.

Despite the concerns, caution is advised against interpreting Monday’s movements as a definitive indication of a sector leadership rotation. Market breadth appeared robust, with a substantial number of stocks rising in the Nasdaq-100 and the S&P 500. Semiconductors, notably boosted by Broadcom’s significant gain, took the spotlight on Monday, reflecting continued investor interest in the tech sector and the potential shift towards the next tier of technology stocks.