Take a fresh look at your lifestyle.

Magnificent Seven’s stocks start year on back foot, but investors are buying their bonds

The stocks of the “Magnificent Seven” group of big tech companies have fared poorly so far in 2024, but investors in their bonds seem unfazed.

The outstanding bonds of the six companies in the group that have issued them — Tesla Inc. TSLA, -0.22% has issued convertible bonds in the past, but they have been converted to equity — have seen net buying over the last three days, while spreads have slightly widened.

The following chart from data-solutions company BondCliQ Media Services shows flows over the last three days, with Amazon.com Inc. AMZN, -2.63%, Apple Inc. AAPL, -1.27% and Microsoft Corp. MSFT, -0.72% seeing the bulk of the action. The remaining members of the group are Nvidia Corp. NVDA, +0.90%, Google parent Alphabet Inc. GOOGL, -1.82% and Meta Platforms Inc. META, +0.77%

BondCliQ Media Services

The following chart shows how buying breaks down by client type:

BondCliQ Media Services

Spreads to Treasurys are slightly wider over the period, but that has not deterred buyers. The 10-year Treasury yield has climbed back above 4%, but these quality names are still looking attractive for the yield they offer.

BondCliQ Media Services

The stocks, meanwhile, have started the year squarely on the back foot, led by Apple, which is down 5.5% in the year so far after downgrades from Barclays and Piper Sandler.

Piper analyst Harsh Kumar cut the stock to neutral from overweight on Thursday, citing concerns about valuation as well as pressures in the smartphone market.

Kumar said he is worried about handset inventories during the first half of the year, while predicting that growth rates for unit sales have peaked. This is notable given that iPhones represent about half of Apple’s revenue.

See also: Apple’s stock needs to get ‘unstuck’ — and its innovation rut may not be helping

His downgrade followed one from Barclays analyst Tim Long on Tuesday, though Long moved to an underweight stance from his prior neutral position.

Amazon is down 3.9% so far this year, while Tesla is off by 3%, Nvidia is down 2.6% and Alphabet is down 1.2%. Meta has fallen 1.4%.

The Nasdaq Composite COMP is down for a fifth straight day, putting it on pace for its longest losing streak since Oct. 12, 2022, when it fell for six straight trading days, according to Dow Jones Market Data.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More