The Magnificent Seven Is Down to One
Do we have a ceasefire or not?... Markets move on fast... Airlines are still feeling the pain... The Magnificent Seven is back on top... But it's all thanks to the 'Magnificent One'...
About that ceasefire...
After President Donald Trump announced yesterday that he would be extending the ceasefire with Iran, the White House clarified the details. Fox News reported today that the ceasefire extension is specifically for three to five days, citing an unnamed administration source.
Under that timeline, the ceasefire would end during the weekend. Aside from that headline, we got news that makes us skeptical that the pause in hostilities will last...
Today, Vice President JD Vance postponed his planned trip to Pakistan for further negotiations with Iran. According to Axios, the Iranian delegation has said that the country won't take any peace talks seriously as long as the U.S. has its own blockade in the Strait of Hormuz.
Also today, Iran fired on three ships and seized two of them for what its navy called "maritime violations." That doesn't exactly paint yesterday's ceasefire announcement in a positive light.
But the stock market has moved on...
In yesterday's Digest, we told you that investor sentiment has turned from fearful to greedy over the past two weeks. As our colleague Brett Eversole wrote in the April issue of True Wealth, this is nothing new. Needing to expect quick rebounds like this has been "the investment lesson of the 2020s," Brett said.
It's a theme we also saw play out last year with the sharp rebound from the "tariff tantrum"...
And Brett also gives the example of the COVID-19 pandemic, in which stocks fell more than 30% in a month as fears of a global lockdown and economic collapse spread.
As Brett wrote...
Within a month, markets had erased half their total losses. Of course, the bad headlines kept coming...
We saw fresh economic data that was the worst on record... lockdowns and social unrest around the globe... and a frightening death count, with cases ticking upward.
The outlook wasn't good. But still, the market moved on. It hit new highs about five months after the March low... And it eventually doubled in less than two years.
That's exactly what we're seeing now. Even with an extended ceasefire, we're far from the "all clear" that folks may have thought we needed before getting back to all-time highs.
But the market has decided that the worst is likely behind us.
And today, markets clearly favored the extension of the ceasefire, even as tensions remain high. Another passage from True Wealth helps explain why...
The second negative headline never stings as bad as the first... The third stings even less... and so on, until the markets simply stop caring.
And that's how markets performed today. All three major indexes were higher today, with both the S&P 500 and the Nasdaq Composite Index jumping more than 1%.
That doesn't mean the risk is completely gone, though...
We're still learning just how much the conflict is hurting companies...
In its earnings report yesterday, United Airlines (UAL) cut its earnings per share ("EPS") forecast for 2026 from a range of $12 to $14 per share to a range of $7 to $11 per share.
At the midpoints of those ranges ($13 per share previously and $9 per share now), that's more than a 30% reduction in projected earnings for the year. And high fuel costs are to blame...
United said it expects to pay about $4.30 per gallon for jet fuel on average over the second quarter. Right now, jet fuel is at about $3.71 per gallon – up 91% from the same period a year ago.
Even if oil and jet fuel were to fall back to $3 per gallon, that would still represent around a 50% increase from 2025. So there's still a long way to go before we get back to pre-conflict levels.
If energy prices keep eating into earnings, companies are going to try and pass those costs on to consumers. Elsewhere in the airline industry, Alaska Air (ALK) pulled its earnings guidance entirely and said that it had raised prices by $25 per ticket to cover higher fuel costs.
As we noted yesterday, the economy is full of similar indicators that point to higher inflation. If that continues into the summer, the market may start to pay attention.
Here come the Magnificent Seven earnings...
Today, after market close, Tesla (TSLA) releases its quarterly results – making it the first of the Mag Seven to report. The electric-vehicle maker had already released its deliveries for the first three months of the year, showing about a 6% increase from the first quarter of 2025.
With that in mind, a lot of the focus this afternoon will be on CEO Elon Musk's earnings call. He'll likely give updates on the company's robotics aspirations, Tesla's robotaxi network, and possibly even the upcoming IPO of his SpaceX company.
Next week, five more Mag Seven companies will report earnings...
These companies' spending plans for AI will still be in focus. Hyperscalers have spent about $930 billion on data-center projects over the past six years, as AI researcher Fin Moorhouse shared on the social platform X.
On an inflation-adjusted basis, that makes it far and away the largest infrastructure project in U.S. history – nearly twice what America has spent on railroads in 65 fewer years.
Also, Apple (AAPL) will share its first earnings report since announcing its new CEO. John Ternus, former president of hardware engineering, will lead the company starting in September. Outgoing CEO Tim Cook will become the company's executive chairman.
The Magnificent Seven are still incredibly important for the broader market...
The seven companies – Tesla, Apple, Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT), Meta Platforms (META), and Nvidia (NVDA) – make up more than 33% of the S&P 500 Index.
And they're more than 50% of the tech-heavy Nasdaq 100 Index.
As we've written in previous Digests, that concentration in just a few names is great for markets when these stocks are going up. Since they have such a heavy weighting, they can pull up the rest of the market when most other stocks are still struggling.
That's what we've seen since the markets bottomed on March 30...
That day, both the S&P 500 and the Roundhill Magnificent Seven Fund (MAGS) made their lows for 2026. But since then, MAGS is up about 20%, outpacing the overall S&P 500 (up about 12% over that period after hitting a new all-time high last week).
And the Invesco S&P 500 Equal Weight Fund (RSP) – which gives all 500 companies an equal share – is "only" up about 8% over the same period. It remains about 1% below its all-time high from February.
And there's a good reason for this outperformance. Put simply, the Mag Seven are growing faster than the "rest" of the market.
In the first quarter, FactSet expects the Mag Seven to grow EPS by 22.8% over the first quarter of 2025. And for the full year, that growth rate increases to 24.6%.
By contrast, FactSet estimates the index's other 493 companies will grow EPS by about 10% in the first quarter and 16% for 2026.
As long as that earnings outperformance continues, the Mag Seven will continue to command an outsized share of the stock market.
But that's all down to one company...
As FactSet explained in its weekly Earnings Insight...
However, it should be noted that NVIDIA is expected to be the top contributor to (year-over-year) earnings growth for the "Magnificent 7" companies (and the entire S&P 500) for Q1 2026. If NVIDIA were excluded, the estimated earnings growth for the "Magnificent 7" companies for Q1 2026 would fall to 6.4% from 22.8%.
Thus, if NVIDIA were excluded, the other 493 companies would be reporting higher earnings growth than the remaining "Magnificent 7" companies for Q1 2026 (10.1% vs. 6.4%).
The story is the same for the full year. Without Nvidia carrying the group, the Mag Seven's EPS growth drops to 13.2% in 2026.
But even with their diverging growth rates, the Magnificent Seven's stocks continue to outperform. The S&P 500 overall costs 28 times earnings... And only one Mag Seven stock (Microsoft) has a lower valuation.
If these "magnificent" stocks fail to grow their earnings at the same rate as the broader market, they wouldn't deserve such a premium to the broader market.
Without Nvidia, the rest of the Mag Seven still makes up more than 26% of the S&P 500 and about 48% of the Nasdaq 100. So there's still a risk of high concentration into the largest tech stocks – even if Nvidia, the "Magnificent One," is still thriving.
As we've written before, the S&P 500 Equal Weight Fund is a great way to protect against that concentration. It tends to outperform when the largest companies are falling yet the broader market still has strength "under the hood."
As Stansberry's Investment Advisory editor Whitney Tilson explained about his decision to add equal-weight index funds to his personal portfolio in the March 9 edition of his free, daily e-letter...
I felt it would provide some diversification away from how dominant the Big Tech stocks had become and add a modest boost to my returns.
Depending on how next week's earnings releases go, it could confirm the market's rebound – or take the wind right out of its sails. And that could be the next driver for RSP to outperform again.
New 52-week highs (as of 4/21/26): Advanced Micro Devices (AMD), Arista Networks (ANET), Alpha Architect 1-3 Month Box Fund (BOXX), Cisco Systems (CSCO), DigitalOcean (DOCN), DXP Enterprises (DXPE), Emcor (EME), FirstCash (FCFS), Hubbell (HUBB), Nucor (NUE), Ryder System (R), Tenaris (TS), Twist Bioscience (TWST), and State Street SPDR S&P Semiconductor Fund (XSD).
Another quiet mailbag today... What's on your mind? Any topics you'd like us to write about? Let us know your questions and comments at feedback@stansberryresearch.com.
All the best,
Nick Koziol
Baltimore, Maryland
April 22, 2026