Chart is for illustrative purposes only. Past performance is not necessarily an indication of future results.
The Magnificent Seven and large cap growth stocks1 outperformed the S&P 500 for the majority of 2025, but equity leadership shifted at the end of October. Cyclical stocks — those that are more economically sensitive — lagged large cap growth stocks and shares of mega cap technology companies until November 1, when we first detected a broadening in markets.
It was the beginning of a global rotation out of those growth-oriented and technology businesses into cyclical areas, such as small cap and large cap value stocks. Since November, cyclicals are up 11.8% compared to the negative returns for growth stocks and big tech in the S&P 500.
What changed? Markets are pricing in a stronger global growth outlook despite current events around geopolitics and tariffs. Many factors support improved economic activity, such as increasing capital expenditures, resilient consumer spending, improving productivity, easing financial conditions, and solid earnings growth.
Even given these tailwinds, it is often hard to ignore headline noise. Nonetheless, we reiterate one of our core investing principles: don’t get distracted by headlines and stay invested. We believe that over the long run, wealth is built by staying the course, remaining invested and keeping diversified.
All investments involve risk, including the possible loss of principal. Certain investments have specific or unique risks that should be considered along with the objectives, fees, and expenses before investing.
1Represented by the S&P 500 Growth Index
The S&P 500 Index: The S&P 500 Index is a stock‐market index that tracks the performance of 500 of the largest publicly traded U.S. companies, weighted by their market capitalization, and is widely used as a benchmark for the overall U.S. equity market. Investors may not invest directly into any index.
The Magnificent 7: The Magnificent 7 comprises seven of the largest technology-centered growth stocks: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
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