Market Outlook for "Magnificent 7" ETFs Post-Earnings in 2024 After a Sell-Off

ETF Tracker07-30

The "Magnificent 7," the stock market darlings of 2024, have lost momentum recently. This downturn is driven by market rotation, investor shifts to less popular sectors, expectations of a Federal Reserve rate cut in September, and Tesla’s (TSLA) weak performance. Even Alphabet’s (GOOGL) strong earnings didn’t boost investor sentiment.

The Nasdaq 100 Index fell by 8% in two weeks, nearing correction territory. Following Tesla and Alphabet's quarterly reports on July 24, the "Magnificent 7" lost over $750 billion in market cap.

Investors are cautious about the upcoming earnings from other members. Microsoft (MSFT) reports on July 30, Meta Platforms (META) on July 31, and Apple (AAPL) and Amazon (AMZN) on August 1. The "Magnificent 7" are expected to post second-quarter earnings growth of 26.8% and revenue growth of 13.7%, compared to the first quarter's earnings growth of 51.2% and revenue growth of 14%.

Microsoft

  • Earnings ESP: +1.08%

  • Zacks Rank: #3

  • Performance: Gained 4.6% in the past three months

  • Highlights: Collaboration with OpenAI, rapid deployment of generative AI, strong cloud business growth

Meta Platforms

  • Earnings ESP: -1.45%

  • Zacks Rank: #3

  • Performance: Gained about 3% in the past three months

  • Highlights: Investment in AI, increasing AI-generated content on Facebook and Instagram, high user engagement and advertiser interest

Apple

  • Earnings ESP: +3.05%

  • Zacks Rank: #2

  • Performance: Gained 3.5% in the past three months

  • Highlights: Launch of AI feature Apple Intelligence, potential for a new upgrade cycle, concerns over declining sales in China

Amazon

  • Earnings ESP: +4.58%

  • Zacks Rank: #2

  • Performance: Down about 2% in the past three months

  • Highlights: Dominance in e-commerce, booming advertising unit, accelerating cloud business growth driven by AI capabilities

ETFs to Consider

Roundhill Magnificent Seven ETF (MAGS)

  • Details: Equal-weight exposure to the "Magnificent 7"

  • AUM: $676.5 million

  • Fees: 29 bps annually

  • Volume: 120,000 shares daily

MicroSectors FANG+ ETN (FNGS)

  • Details: Equal-weighted exposure to next-generation tech and growth stocks

  • AUM: $353.6 million

  • Fees: 58 bps annually

  • Volume: 120,000 shares daily

Vanguard Mega Cap Growth ETF (MGK)

  • Details: Tracks CRSP US Mega Cap Growth Index

  • AUM: $21.1 billion

  • Fees: 7 bps annually

  • Volume: 299,000 shares daily

  • Exposure: "Magnificent 7" collectively 35.8% of assets

Invesco S&P 500 Top 50 ETF (XLG)

  • Details: Tracks S&P 500 Top 50 Index

  • AUM: $5 billion

  • Fees: 20 bps annually

  • Volume: 2 million shares daily

  • Exposure: "Magnificent 7" collectively 33.4% of assets

iShares S&P 100 ETF (OEF)

  • Details: Exposure to 101 largest U.S. companies

  • AUM: $12.8 billion

  • Fees: 20 bps annually

  • Volume: 185,000 shares daily

  • Exposure: "Magnificent 7" collectively 28.3% of assets

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