‘Magnificent 7’ Stocks Take Off On CPI Data, Trump’s FTC Nominee: Analyst Says 'Christmas Comes Early’ For Tech
By Stocktwits Inc | First Published Dec 12, 2024, 12:01 AM ISTWedbush’s Daniel Ives said the Khan overhang is removed for the tech world at a key time in the AI arms race in which he expects the strong to get stronger.
Shares of the big technology companies, which go by the collective name of “Magnificent 7,” traded either in record territory or were eyeing fresh records in mid-day trade on Wednesday. A couple of key catalysts panned out in favor of these stocks, accelerating their upward momentum.
The Roundhill Magnificent Seven ETF ($MAGS), an exchange-traded fund (ETF) that tracks these stocks, was last seen up 2.63% at $56.92, off the day's high of $56.98, which marked a record.
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The Catalysts
The November consumer price inflation report, released ahead of the market open, showed that the monthly and annual rates of both consumer and core consumer price inflation coming in line with expectations.
The in-line data has all but confirmed a 25 basis point cut in the Fed funds rate when the central bank’s monetary policy committee meets next week to decide on rates. The futures market is currently pricing in a 94.7% probability for a quarter-point reduction, according to the CME FedWatch tool.
A more benign interest rate environment favors companies, especially those with a higher debt capital.
The big techs also drew encouragement from President-elect Donald Trump naming Andrew Ferguson as the replacement for Federal Trade Commission (FTC) Chair Lina Khan. Khan’s tenure has been marked by a tough stance on antitrust issues and she took on the big techs over their anti-competitive practices.
Under Khan, the FTC won a federal lawsuit that alleged Alphabet, Inc.’s ($GOOG) ($GOOGL) Google dominated the search business and has formally called for a partial breakup of the company.
Commenting on Khan’s imminent ouster, Wedbush analyst Daniel Ives said, “Christmas comes early for the tech world.”
“The Khan overhang is removed for the tech world at a key time in the AI arms race in which we expect the strong to get stronger as Mag 7 gets the engines started up again on M&A,” he added.
Ferguson, a current Republican-leaning member of the FTC, has promised to ease the policing of powerful U.S. companies, Ives said. He added that having a pro-innovation FTC chair is positive for the tech world, and with Khan soon to be gone, the chances of tech breakups go down significantly.
Exuberant Mood
Apple, Inc. ($AAPL) was last seen trading up 0.68% at $249.45 after it breached the $250 level for the first time earlier in the session. The stock was also reacting to the rollout of new Apple Intelligence features across its hardware devices and rumors of the company developing a new AI server chip.
Retail sentiment toward the stock stayed 'bullish' (67/100) despite some retailers expressing uneasiness over the overbought levels.
Alphabet stock also traded at new highs as it extended the upward momentum from Tuesday built on the back of the announcement concerning its Willow quantum chip. The stock was seen trading up 5.01% to $194.44.
Retail sentiment toward Alphabet stock was ‘extremely bullish’ (86/100) accompanied by ‘extremely high’ message volume.
Social media giant Meta Platforms, Inc.’s ($META) stock hit a fresh intraday high of $638.40 on Wednesday and is on track to close at a new record.
On Stocktwits, sentiment toward Meta stock was ‘bullish’ (59/100), reversing from the ‘bearish’ mood that prevailed a day ago. Message volume remained at a ‘normal’ level.
Amazon, Inc. ($AMZN) hit an all-time high of $231.20 and last traded up 2.47% at $230.60. The stock is eliciting a ‘bullish’ reaction (60/100) from Stocktwits users.
Tesla, Inc. ($TSLA) shares went past their previous all-time intraday high of $414.50 on Nov. 4, 2021, and touched $415.57.
Retail sentiment toward the Tesla stock was ‘extremely bullish’ (83/100), with message volume staying at a ‘high’ level.
Nvidia Corp. ($NVDA) and Microsoft Corp. ($MSFT) were laggards among the Magnificent 7 and traded off their all-time highs.
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