On Friday, Bank of America (BAC) warned that the Magnificent Seven‘s strong influence on the S&P 500 (SPY) could be disrupted if the U.S. economy slows down significantly. This month, the Nasdaq 100 (QQQ) and other tech indices have dropped as investors exit mega caps and turn to small-caps (IWM) and other less popular sectors amid expectations of possible rate cuts. Bank of America’s Michael Hartnett mentioned that while some see this market correction as a good thing, others are worried it could lead to a major drop, especially if the upcoming job reports are bad.
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Economists are also noting a slowdown in U.S. job growth as June’s unemployment rate rose to 4.1%, which was the highest since November 2021.
Furthermore, bears are pointing to the steepening U.S. Treasury yield curve and falling commodity prices as recession signals. It certainly didn’t help either that both Tesla (TSLA) and Alphabet (GOOGL) reported disappointing earnings results, which have some wondering if this year’s AI-driven rally is losing steam.
However, market optimists point out that credit spreads are stable and key levels—like the Nasdaq 100 staying above 18,700 and London copper prices above $9,000 per metric ton—are holding up.
Which Magnificent Seven Stock Is the Best Buy?
Of the Magnificent Seven stocks—Amazon (AMZN), Alphabet, Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla—analysts expect the most upside potential from Nvidia. In fact, its $142.74 per share price target implies over 27% upside potential.
