Jim Cramer, host of CNBC's “Mad Money,” advises investors to consider buying the “Mag-7” stocks when interest rates rise and buy everything when rates fall.
What Happened: Cramer emphasized that markets are resilient when they are oversold. He wrote on X, “As @jeffmarkscnbc and I said, we are back to a world where interest rates go up so you can buy Mag 7s and interest rates go down so you can buy everything. When we get oversold, markets become more cautious.”
Cramer's discussion with CNBC's Jeff Mark highlights their approach to weathering market fluctuations based on interest rate movements. The “Mag 7” refers to a group of high-performing tech stocks.
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The Magnificent Seven is a group of mega-cap tech stocks that includes Apple (AAPL), Amazon.com (AMZN), Meta Platforms (META), Nvidia (NVDA), Tesla (TSLA), Microsoft (MSFT), and Alphabet (GOOGL GOOG).
Why it matters: The technology sector, a key driver of the stock market's recent rally, has been downgraded by Truist Chief Strategy Officer and Chief Investment Officer Keith Lerner. The move comes amid concerns about overvaluation and subsequent recommendations to invest in alternative sectors. Lerner recently downgraded the technology sector to neutral from overweight, citing concerns about current valuations.
In January, Cramer proposed removing Tesla from the “Magnificent Seven,” giving the group of giant tech stocks a new name.
Wedbush analyst Dan Ives recently predicted that the growing use of AI could drive a 15% surge in tech stocks in the second half of 2024. Ives believes the tech bull market is here to stay, suggesting the current AI boom is far from over.
What's more, the era of the “Magnificent Seven” in the stock market may be coming to an end, says Mike O'Rourke, chief market strategist at Jones Trading and the man who popularized the term.
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This story was produced with Benzinga Neuro and edited by Kaustubh Bagalkote.