Tech Giants Soar While Defensive Sectors Struggle in Tale of Two Stock Markets
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The stock market is exhibiting a "tale of two cities" dynamic, with mega-cap tech stocks like the "Magnificent 7" soaring while more defensive sectors struggle.
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The Mag 7 now comprise a massive 33% of the S&P 500's total market cap, rivaling the dominance of tech stocks during the dot-com bubble.
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While the Mag 7 post strong growth, much of the economy fights weak demand and struggles to service debt in a high interest rate environment.
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The Mag 7 have vastly outperformed a group of "Magnificent 7 Dividend Stocks" so far in 2023, but dividend stocks could stage a comeback if rates fall.
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The Fed's actions throughout 2023 will heavily influence whether tech's "best of times" continue or whether more defensive sectors finally enjoy "the spring of hope."