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Technology Leads Market Volatility

Friday’s trading day was a prime example of the impact that technology-related stocks have on the S&P 500’s movement. Technology-related stocks play a huge role in how the market fluctuates. The “Magnificent 7” stocks (Microsoft, Apple, Google, Nvidia, Meta, Amazon, and Tesla) account for nearly 29% of the S&P 500’s movement. The Information Technology and Communications sectors combine for nearly 40% of the index’s market capitalization.

On Friday, the S&P 500 declined by -0.88%. The Information Technology sector fell -2%, while Communications declined -1.10% and Consumer Discretionary (containing Amazon and Tesla) fell -0.88%. Meanwhile, Financials (the second largest sector) rose +1.38%. While the S&P 500 declined -0.88%, the equal stocks weight S&P 500 rose +0.38%.

Eighty percent of the S&P 500 stocks outperformed the index on Friday. The market’s largest components, those technology stocks that have risen substantially, are what caused the market to decline. Here is a breakdown of the Magnificent 7’s Friday performance, ordered from largest stock to smallest:

Stock (% of S&P 500)

Friday (4/19/2024) Performance

Microsoft (7.11%)


Apple (5.74%)


Nvidia (4.51%)


Google (2 share classes, 4.02%)


Amazon (3.83%)


Meta (2.54%)


Tesla (0.97%)


Total: 28.72%

Mag 7 Performance: -3.15%

*Source: Canterbury Investment Management. Stock S&P 500 weightings sourced from SPY holdings. Daily performance sourced from Yahoo Finance. Mag 7 Cap weighted performance calculated by Canterbury. Every effort was used to provide accurate data and mathematical calculations to provide, what we believe to be, accurate results.

To summarize the table above, Magnificent 7 stocks were down a collective -3.15%. These seven stocks make up nearly 30% of the S&P 500’s capitalization. So goes technology, so goes the market.


Over the last week’s trading, it appears that the sellers have been in control. With the exception of Friday, every trading day last week saw the market open higher for the day, and then close down near its low. It should also be noted that trading volume last week was extraordinarily low.

Last week’s decline occurred on low volume. All five trading days last week had volumes ranking among the lowest ten for the past six months. It was the lowest trading volume week in the last six months for the S&P 500. In other words, there wasn’t a lot of volume that caused the week’s decline.

Investor Sentiment

According to the Investor Sentiment Survey, which is conducted by the American Association of Individual Investors, bullish sentiment fell last week while bearish sentiment rose. The survey showed that 38% of investors surveyed indicated that they had a bullish, or positive, outlook on the markets, while 34% held more pessimistic views. This is the lowest bullish sentiment and highest bearish sentiment readings since November 2nd, 2023.

Investor sentiment is a contrarian indicator. Typically, investors feel most bullish near peaks and most bearish near troughs. At the market’s recent peak in late March, bullish sentiment was at 50%, while bearish sentiment was at 22%. Now that markets have pulled back, sentiment has shifted. For reference, the latest sentiment readings are within range of the historical average. Historically, bullish sentiment has averaged 37.5%, while bearish sentiment has averaged 31%.

Bottom Line

Markets were shaky last week. Most of the trading days opened higher yet closed near their lows. Market weakness was led by large technology stocks. Those same stocks carried the markets higher last year. The volatility of technology stocks rose about 12% last week (according to Canterbury Volatility data on the Nasdaq). We will continue monitoring changes in volatility.

Last week’s decline was the lowest volume trading week in the last six months. Each trading day’s volume ranked in the bottom ten of largest volume for the last six months. Low volume arguably points to low conviction, but we are a little concerned that each day last week opened higher, while closing lower.

Right now, the market is experiencing a pullback, and has not yet shown that it wants to go back up. For it to want to go back up, technology stocks will have to do some of the heavy lifting.

For our Canterbury Portfolio Thermostat, we continue to hold a basket of stocks and ETFs. One minor adjustment we made was taking a short-term risk management position in the inverse Russell 3000. Small caps have experienced a more volatile decline than large caps. An inverse position lowers the portfolio’s volatility, which becomes particularly important if the volatility in the markets rises. Even with this small position, the Thermostat continues to hold several stock positions.


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