The Magnificent 493

As midwestern skies turn sunny, temperatures warm, and children make their way home from school for summer break, it almost seems on cue that we see a meaningful break in hostilities and political developments in Iran¹. While solid news of a peace deal, a resumption of crude oil flows, and open shipping lanes is a positive, we have our eye on how markets are repositioning. June opened with high volatility and a selloff in some of the highest-flying technology stocks. Much of that decline, in our view, was due to over-extension of conditions. Markets have rallied strongly from February lows and were due for a pullback, especially in the tech sector. Overall, the selling did not appear panicked; rather, we saw a rotation of investment into other value-oriented sectors such as Health Care and Financials. Year-to-date through the June 16 close, the so-called Magnificent Seven stocks (as measured by the Roundhill Magnificent Seven ETF, (MAGS) are basically flat in 2026 with a measly +0.02% return, while the cap-weighted S&P 500 ETF (SPY) stands at a glowing +10.03%. What can we infer from the discrepancy? The market rally has broadened, and the 493 stocks outside of the seven heavyweight U.S. technology stocks that dominate both global markets and the S&P 500, are taking a turn at the wheel. We'd argue this participation is healthy for markets overall.

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