CNBC’s Jim Cramer said Wednesday that high-dividend stocks are getting more attention as Wall Street’s appetite for buying the “Magnificent Seven” tech stocks wanes.
“The market temporarily lost love for MagSeven,” Kramer said. “This is a new market — and that’s just the way it is — where the big-cap tech companies are no longer the leaders. In this market, money is being poured into small-cap stocks, health care, banks, etc., as well as a lot of boring high-yield stocks. REITs and utilities.”
Much of 2023 was dominated by mega-cap tech stocks like Apple, Alphabet, Meta, Microsoft, Amazon, Nvidia, and Tesla. But since U.S. Treasury yields peaked in October, indexes tracking these tech stocks have underperformed the equally weighted S&P 500 index, which gives each company the same influence on performance. The traditional S&P 500 is weighted by the market capitalization of each constituent stock.
Cramer said this shift is partly due to the Federal Reserve starting to cut interest rates and more investors believing that dividend stocks will become more valuable.
He cited several “new darlings” of the market, including banks and health care companies. He said investors are using profits from the Magnificent Seven to buy these dividend stocks, explaining how the market sees a “rotation” away from Big Tech. .
However, Kramer emphasized that the Magnificent Seven is still a great company and that this rotation is not permanent.
“Don’t worry, the seven will return to their rightful places eventually,” he said.
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Disclaimer CNBC Investing Club Charitable Trust owns stock in Apple, Alphabet, Meta, Microsoft, Amazon, and Nvidia.