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Stock market winners in 2023 are last year's losers

As we move toward the halfway mark of 2023, what are the stock market winners of the year? And how did the "Magnificent 7" stocks impact the market? Yahoo Finance's Ines Ferre breaks it all down.

Video transcript

JULIE HYMAN: Well, tech stocks have had a major rebound this year driven by the hype over AI. Also making moves higher, communications and consumer discretionary. Joining us now with a breakdown of these stock market winners is Yahoo Finance's Ines Ferré. Ines, what have we been seeing?

INES FERRÉ: Well, we are almost at the halfway mark through the year. So we decided to take a look at the sectors. And as you mentioned, Julie, we are seeing that the rally this year has really been concentrated in technology, communication services, consumer discretionary. By the way, these three sectors were the biggest laggards last year.

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So why this tech-fueled rally? Well, part of this has to do with investors' expectation that the Fed may pause their rate hikes this year or perhaps even pivot. Then you had that AI craze that has really fueled the rally with names like Nvidia. And then you also had the banking crisis whereby investors were getting out of financials. They were getting out of cyclicals.

And speaking of, take a look at XLE. This is the energy ETF sector, down 6% this year. But remember, this was the biggest performer last year, up 64%. One analyst is saying perhaps also investors were taking profits from their energy and taking it into what was then over-- oversold, which was technology and communication services, and then it became overbought, perhaps.

So, look, what analysts are saying now about this tech rally is, as you guys were mentioning throughout the show earlier, is that it is narrow. The breadth is not necessarily all there. So I'm going to pull up the NASDAQ 100, still with a year-to-date chart. The "Magnificent Seven," as Wall Street likes to dub them, including names like Amazon, like Alphabet, Nvidia up 161% this year. This stock last year was down about 48%.

These are the outperformers. These are the ones that have been really fueling this rally. And, in fact, in the NASDAQ 100, 83% of the gains is attributed to the "Magnificent Seven." And analysts are saying if you want this rally to last, you really need to widen the participation, guys.

BRAD SMITH: Yeah, absolutely. Got some chip companies perhaps just saying to themselves, hey, can we make this the "Elite" Eight? Why not? Just throwing their hat into the ring. Thanks so much, Ines Ferré. Appreciate it.