The Magnificent Seven are making a comeback because AI-focused companies are again leading the market. Nvidia closed Monday at a record high, lifting its market value to $5.76 trillion, while Microsoft rose 1.5% and Meta and Tesla each gained about 2%, pushing the Nasdaq to a record close. The rally gained traction after weaker September jobs data cut the odds of an October Fed rate hike to 24% from 70% a week earlier, easing pressure on high-growth tech stocks.
The Macro Conditions That Opened the Door
Falling oil prices and upcoming bank earnings are also helping. Oil slipped after Middle East crude exports increased and G7 nations pledged to boost supplies, giving investors one less inflation concern. Third-quarter earnings season begins next week with large US banks, and analysts expect S&P 500 earnings to jump more than 30% year over year, largely because of AI-related stocks, which supports the Magnificent Seven's recovery.
The Technical Picture
The price moves in parallel, with lower bound founding 4 supporting points and only 2 limiting points before price move out of bound in mid-April 2026. Coincidentally, the same time of year the market limit down a year before after the Iran war kick-off, blocking off Strait of Hormuz, and exacerbate inflation concern after oil shot up in price.
The price is currently in uncharted territory, shooting for 8,000 points and psychologically limited at 8,200 since Fibonacci levels became reference from previous two retracements. The interest rate risk are relatively low now that the chances of a hike points toward another pause, but a risk of a December hike persist.
The comeback is not only about a few AI leaders. Ten of 11 S&P 500 sectors rose, with materials and communication services leading, and advancing issues outnumbered decliners 1.7-to-1. If rate-hike fears stay low and earnings confirm AI demand, the Magnificent Seven will keep on supporting the broader market higher.
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Source: https://www.reuters.com/world/europe/wall-st-futures-dip-tech-stocks-take-breather-2026-10-05/
