The “Magnificent 7” – Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla – have been the darlings of Wall Street for the past few years. Their dominance in technology and their massive market capitalization have made them key drivers of the S&P 500’s performance. In 2024 they gained 63%, after rising more than 75% the year before. But will their reign continue in 2025?
Meta, the parent company of Facebook, has once again made headlines with its impressive fourth-quarter earnings report, surpassing analyst expectations on earnings, revenue, and user growth. The announcement also included a first for the company: a dividend payment to its investors. This news sent Meta’s stock soaring 15% in extended trading.
The anticipated peak of the earnings season is upon us as we venture into the final week of July. This period will witness companies spanning various sectors, publishing their financial reports. While much of the limelight is likely to be on tech behemoths, we must not overlook the importance of the forthcoming reports from businesses across consumer staples, industrials, and energy.
The U.S. market has experienced a significant shift in recent years, with a handful of tech giants commanding a larger share of the S&P 500 index. This has led traders to seek ways to hedge their short index positions and protect their portfolios. In this article, we will delve deeper into the growing dominance of Apple Inc. and Microsoft Corp. in the S&P 500 and explore how these secular stocks can help balance the risks associated with short positioning in index trading.