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RALLY IN US STOCKS MAY BE BROADENING OUT - DATATREK

The rally in U.S. stocks may finally be broadening out, Nicholas Colas, co-founder of DataTrek Research, writes in a note Friday.

While the benchmark S&P 500 .SPX is up about 4% for the year to date, the seven technology-related megacap companies, or the Magnificient 7, account for just 0.2 percentage points of that increase, he says.

Meta Platforms META.O, which is on track Friday for a 20th straight session of gains and up about 26% for the year to date, is the only big contributor in that group to the S&P 500's gains so far in 2025, he writes.

"The other six names have collectively been a drag on the S&P," he writes, referring to Nvidia NVDA.O, Apple AAPL.O, Microsoft MSFT.O, Alphabet GOOGL.O, Amazon.com AMZN.O and Tesla TSLA.O. Colas adds that a broadening out of the market rally is a "common sign of a mid-cycle market."

For most of the last two years, Nvidia and many of the other megacap names have driven gains in the stock market in a rally fueled by optimism over artificial intelligence.

A surge in popularity in late January of Chinese AI model DeepSeek had poured some cold water on that optimism.

Here is a graphic showing the performance of the seven largest stocks versus the rest of the S&P 500:

(Caroline Valetkevitch)

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