Mag 7 take a hit, $2T in sideline investor cash: Top Takeaways

The Magnificent Seven — the grouping of premier tech stocks Amazon (AMZN), Apple (AAPL), Alphabet (GOOG, GOOGL), Nvidia (NVDA), Meta Platforms (META), Microsoft (MSFT), and Tesla (TSLA) — had their worst day in over a year, with Tesla snapping its 11-day winning streak after reports of the company pushing back its robotaxi unveiling date. In addition, retail investor cash sitting on the sidelines has hit a record high, reaching over $2 trillion.

Yahoo Finance senior markets reporter Jared Blikre joins Asking For A Trend to break down the latest market trends for July 11.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Nicholas Jacobino

Video Transcript

Y finances.

Jared Blicker joins us now with more on the trading takeaways.

Jared, what a day I’m gonna show you the mag seven just got a beat down.

I’m gonna show you how bad it was.

And then we can have a conversation about what the future holds.

Uh, just to rattle off some statistics.

And this is, uh, some of the largest stocks in the world.

You see, in video, they’re down 5.5%.

By the way, that was not the worst showing today.

Some of the stats get pretty bad for the mag seven.

Overall, this was the worst day in a year.

You’d have to go back to July of last year to find Look at all that red Tesla snaps an 11 day winning streak.

Uh, worst day since January 25th.

Second worst day of the year.

Apple snapping a seven day streak.

Worst day since March 21st.

Anyway, it goes on and on, and you can kind of see where this is going.

So the bull market’s over.

We throw in the towel.

Last one out, they they turn on.

I’m gonna go home right now, but let me show you what’s not true.

It’s not true.

Um, there is some green on the screen, not just Bitcoin.

Look at Berkshire.

Halfway up 1%.

What is Berkshire OK?

They own Apple as their biggest position, but that’s a value firm.

Look at ExxonMobil energy in the green today.

I’m gonna show you something that gets me really optimistic here.

And that is the Russell 2000.

That was such an interesting move to show you the day.

This is what the Russell 2000 did.

It gapped up.

And it just went higher on the day.

3.5% on a day when the NASDAQ 100 is negative by 2.24%.

I ran the stats the last time that we had the NASDAQ 100 under 2% and the S and P, or excuse me, the Russell 2000/3 percent happened one time in history.

And it was November of 2020.

And let me just show you a five.

Your chart so you can see where that was.

This is a NASDAQ 100.

I want to show you the Russell 2000 boom.

It was right on there right before liftoff.

Story continues

So this gets me to thinking, you know, the Russell 2000 has been stuck in this sideways range for quite some time.

Is this finally the catalyst, this friendly inflation report that it was needed to propel it to new heights?

I’m going to argue that all of this rotation, we’re calling it rotation for a reason.

People were overly invested in mega caps because they were scared.

This is kind of a safety play, believe it or not.

And they have sold and they are investing in the rest of the market.

So I think when they booked a little profit redeployed, I think it’s a healthy move here.

So I actually am bullish on small caps going forward just because of this one day price action, subject to immediate reversal if I see something different happen.

But that’s the way that’s the way it works.

Modern tech.

Now, this is a big picture.

Statement is greater than the.com era tech.

Uh, we just had Ed Yardeni on the show.

Uh, this is one of his charts.

This goes back to the mid nineties, and this shows, uh, in purple.

This is if you take the tech sector market capitalization plus communication services.

So you wanna get some of the, uh, telecom or you wanna get alphabet and meta even there, even though they didn’t exist back then, Um, that’s the way that he’s constructing this.

So you have the tech and the tech ish down there.

They surpassed 40% of the S and P five hundreds market cap.

Right now it’s at 42%.

And so everybody says, All right, we saw what happened back in the.com.

Is that going to happen?

How does this end?

All right, 25 years ago.

That’s pretty bad.

Exactly.

And what I do like about this is I look at Ford earnings.

So the Ford earnings share, uh, as a percent of the S and P 500 for tech back then was only about 20%.

Look where it is now.

It’s much higher.

That’s because earnings are supporting this greater, higher move in the share prices of these tech stocks.

I showed this this chart a couple of days ago.

This is just S and P 500 earnings expectations.

They are now at a record and what you want to see is they have done nothing but increase since we saw this bull market began going back to this chart.

That’s what happened in here.

So I think that the earnings the gas in the tank is enough to support a higher move.

All right, third final, Jared Blicker take this.

Is cash on the sidelines.

Hold on.

Cash on the sidelines.

This is I get a record more from Ed Yard.

Denny, this is, uh this is $2 trillion for retail alone.

Institutional plus retail is six trillion.

Now, when the Fed starts lowering its rates, guess what happens to money market fund rates.

They go down too, in locked up in real time.

All that money, some of that money could move off the sidelines like it’s done many times before.

Rate cuts are always good, Jared.

You know, rate cuts are not always good.

That’s not true.

The thing is, if you get if you get, um, a rate cut in response to this market moving calamity where recession is finally getting priced and that’s another that’s another story.

But that’s not what we’re dealing with right now.

We’ll say that for another takeaway.

Jared.

Thank you.

Killed it as always.

Thank you.