Here are the takeaways from today’s Morning Brief. Sign up to receive the following in your inbox each morning:
Tesla (TSLA) has been in the headlines this week, hitting its highest price in more than a decade on Thursday as investors lauded the company’s quarterly results and rushed to buy.
With the day’s 22% rise, the stock has firmly regained this year’s gains, and after lagging behind the shares of the “Magnificent Seven,” it is now up nearly 7%, and at some point in April, it is heading into the new year. It has fallen almost 43% since its inception.
This means that for the first time since September, all seven Magnificents are back in the green, as this week’s chart shows. And if there’s one chart that encompasses the story of the stock market in 2024, this remains a strong contender. The more I look at it, the more thoughts come to mind.
Amidst the euphoria of Tesla’s comeback story, for example, its 2024 edition continues to tip in a tragic direction, leaving it a distant backwards and far behind its peers despite this week’s gains.
Zooming out even further, the differences among Big Tech stocks remain stark, with Tesla ranking among this unofficial but important group among potential successors like former FAANG member Netflix (NFLX). Questions continue to arise about its participation, which is up 63% so far. year.
Perhaps the most important line on this chart is the benchmark: who is above it and who is below it. Only two other companies have managed to outperform the S&P 500 this year as Nvidia’s (NVDA) outsized returns further distance it from other Big Tech companies as investors move to other sectors.
Of course, much of the blame lies with Nvidia. When Nvidia moves, the S&P 500 typically moves as well. However, between the META line and S&P’s 23% benchmark, there are approximately 150 companies (30% of the index) that are benefiting from market expansion and rotation, pushing the index higher.
The future trajectory of smoothed stock prices is likely to continue upward, so the story to watch in 2025 is exactly where the S&P 500 line will sit on this chart, and which companies will The question is whether you can perform better than that. As DataTrek’s Nicolas Colas wrote this week, this is where the rubber meets economics and the road of the Magnificent Seven.
“If you believe that US GDP growth could be +3% in 2025, the S&P 493 is likely the smarter bet,” Colas wrote. “In our own view, growth will be more gradual, giving Big Tech an edge.”
Ethan Wolff-Mann is a senior editor at Yahoo Finance and runs the newsletter. Follow him on X @ewolffmann.
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