Weekly Notes from Tim
By Tim Holland, CFA, Chief Investment Officer
- One could argue that over the past few years the primary concern for US investors – even more so than trade and tariffs; fiscal and monetary policy uncertainty (would the One Big Beautiful Bill Act pass, would government shutdowns upend the economy, would the Fed cut rates) and geo-political risk (Israel / Iran; US / Iran and Ukraine / Russia) – was over a stock market dominated and driven by a handful of large cap technology companies that would inevitably and unfortunately fall from favor and pull the S&P 500 sharply lower (we are of course referring to the Magnificent 7, which at its peak represented nearly 40% of that bellwether index).
- Yet, as we take pen to paper, four of the Magnificent 7 – Microsoft, Nvidia, Tesla, and Amazon – have fallen over the prior three months while the S&P 500 has traded up by 2.7%, just shy of Apple’s 3.3% gain (see chart; through 2/6/2026). Now, three months might not a trend make and we are not rooting against the Magnificent 7 specifically or large cap US tech stocks generally, but it seems to us that US equity returns have broadened out beyond the stocks that contributed so much to the bull market that kicked off in 2022. To put a finer point on things, since early November, the Russell 1000 Growth Index is off 3.8%, while the Russell 1000 Value Index is up 10.3% and the Russell 2000, the benchmark for US small cap stocks, is up 10%.
- An optimistic take on recent performance trends is that even as much of US large cap tech moves lower, the broad market is being propelled higher as other styles and sectors, including materials and industrials, and smaller companies catch a bid, which should both make for a healthier and more durable bull market (as more stocks participate in it) and speak to a more optimistic outlook for the overall economy (as a rising economic tide lifts more boats).
- It’s been a volatile few weeks for the market, and while the Magnificent 7 could still be the catalyst for a broad and deep sell off, for now the US bull market marches on, propelled, it seems, by the “The Forgotten 493.”
Source: FactSet, February 6, 2026
Originally posted on Orion on February 9.
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