The outperformance of the ‘Big 7’ tech stocks will continue for the rest of the year, Wolfe says

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Investors can continue to rely on the strength of a small group of tech stocks through at least the end of this year, according to Wolfe Research. The Magnificent 7 or Big 7 are the mega-cap tech stocks that drove the narrow market rally in the first half of 2023, such as Apple and Nvidia . That small leadership group has made many on Wall Street worry that the rally would reverse, but the pattern won’t change any time soon, Wolfe strategist Chris Senyek said in a note to clients Tuesday. “Our sense is that the ‘Big 7’ are likely to outperform from now to year end as they are initially viewed as defensive into ‘higher for longer’ interest rates and a slowing intermediate-term growth outlook. We don’t expect this cohort to materially underperform until these names post disappointing quarterly results and/or issue below consensus guidance — not something we expect in 3Q reports,” Senyek wrote. The CNBC Magnificent 7 Index is up 90% year to date, compared with about 13% for the S & P 500 . The gap is even wider when looking at an equal-weighted version of the S & P 500, which reduces the effects of the biggest stocks. Nvidia has been the biggest star in the group, rising more than 200% on the year. NVDA YTD mountain Nvidia’s stock price has tripled in 2023. The Big 7 have even outperformed during times of market stress. Over the past month, the S & P 500 has dropped more than 2%, but the Magnificent 7 are up 0.5%. — CNBC’s Michael Bloom contributed reporting.