The U.S. stock market is increasingly dominated by a small group of tech giants – the so-called “Magnificent Seven.” This week could be the tipping point that shows whether their dominance is sustainable or if the market needs a broader engine.

🔹 Four of the biggest names in the group are reporting earnings this week, just as investors begin to question how long this narrow group can keep driving the entire U.S. market.

S&P 500 Looks More Like a Tech Index Than a Reflection of the Economy

According to Reuters, the performance of the S&P 500 has become so skewed that it now reflects the trajectory of just a handful of companies more than the broader U.S. economy. Since the beginning of 2023, the capitalization-weighted S&P 500 has risen by 67%, compared to only a 32% gain in its equal-weighted version.

📊 The ratio between the two versions has jumped from 0.66 in 2022 to 0.84 today – the highest level since 2003. In short, mega-cap companies are dominating the index more than ever.

The Market Held Hostage by Tech Giants

Larry Adam of Raymond James notes that S&P 500 earnings are now 14% higher than those of the equal-weighted index. LSEG analyst Tajinder Dhillon adds that the “Magnificent 7” accounted for over 52% of the total earnings growth in the past year.

But this dominance comes with risk: any misstep by one of these giants could rattle the entire market. Dhillon says such concentration is unhealthy – a well-functioning market needs diversity. When Nvidia moves, the whole market moves – leaving smaller stocks in the shadows.

Trump’s Tariffs Add New Uncertainty

Adding to the mix, Donald Trump signed a trade deal with the EU on Sunday, introducing 15% tariffs on most European imports, including cars. On Monday, he said the new global baseline tariff would be between 15% and 20%.

While many traders seemed to shrug off the news on Monday, others are watching closely – especially with Friday’s deadline for enforcement approaching. Meanwhile, U.S. and Chinese officials met in Stockholm for more talks in hopes of reaching a broader trade agreement before time runs out.

Markets React Tepidly – Is It Enough?

Stock futures ticked up modestly Monday – the S&P 500 rose 0.15%, the Nasdaq 100 added 0.24%, and the Dow gained 60 points. But the gains weren’t impressive. While both the S&P 500 and Nasdaq hit new highs, the rally lacked real momentum. The Dow dropped 0.1%, and the Nasdaq rose just 0.3%.

Outside of tech, sectors like finance and industrials are showing some signs of life. But their performance remains buried under the weight of the “Magnificent Seven.”

What’s Next This Week?

Even beyond the U.S., markets like the UK’s FTSE 100 and Germany’s DAX are reaching new highs – and they’re doing it without heavy reliance on big tech. If investors start pivoting to other sectors, this could signal the beginning of a broader market rotation.

But everything depends on earnings. If the giants disappoint, smaller players might finally get room to breathe.


#WallStreet , #stockmarket , #TRUMP , #Tariffs , #globaleconomy

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