Meta Platforms Inc., a leading tech giant, experienced a 5% decrease in its stock value on Thursday, contributing to the overall decline of the Magnificent Seven group. However, despite this setback, the company’s bonds continue to perform well, attracting investors with their attractive yields.
Challenging Quarter for Meta
Following the release of its earnings report on Wednesday, Meta acknowledged that the current quarter has been affected by weak ad demand due to the ongoing tensions in the Middle East. This unexpected development caused a decline in Meta’s stock, echoing similar concerns raised by Snap Inc. a day prior.
Alphabet Inc. Suffers Significant Market Cap Loss
Alphabet Inc., the parent company of Google, faced a substantial loss in market capitalization on Wednesday. The company’s value decreased by $166.6 billion — the largest single-day loss in its history. To put this into perspective, this loss eclipses the market capitalization of well-known companies such as Nike Inc., Advanced Micro Devices Inc., and Walt Disney Co. Despite exceeding revenue and earnings expectations overall, Alphabet’s cloud-computing business fell short, leaving analysts less optimistic about its future profit margins.
Related: Google earnings report reveals challenges for Alphabet’s stock
Amazon’s Upcoming Report
Later today, all eyes will be on Amazon.com Inc. as it prepares to announce its third-quarter financial results, providing further insight into the sentiment surrounding tech giants and their performance.
The Nasdaq Enters Correction Territory
The Nasdaq has officially entered correction territory, having closed below the threshold of 12,922.216 on Wednesday. This marks a significant drop of at least 10% from its previous peak, which was reached in mid-July at 14,358.02, according to Dow Jones Market Data. This is the 70th time since its inception in February 1971 that the Nasdaq has closed in correction territory. The recent surge in long-term Treasury yields has been a major factor contributing to this correction.
The Magnificent Seven Bonds Receive Increased Attention
According to data-solutions provider BondCliQ Media Services, bonds issued by the Magnificent Seven (or six, since Tesla Inc. no longer belongs to this group) have experienced a boost in buying over the past two weeks. This comes as no surprise, considering the exceptional quality of all seven names involved. Ratings for these bonds range from strong single-A for Nvidia Corp. to AAA, the highest possible rating, for Microsoft Corp. Moreover, these bonds currently offer yields in the low to mid-5% range.
Stable Credit Spreads Provide Stability
While bond yields have seen an increase, credit spreads have remained steady. Apple Inc., which holds the largest number of outstanding bonds among the group, currently offers a yield of approximately 5.2%. By comparison, the implied dividend yield on Apple’s stock at its current prices is only 0.6%.
As of Thursday, Apple’s stock has declined by 1.7%. Other companies within the Magnificent Seven have also experienced downturns, with Nvidia down 1.9%, Microsoft down 2.2%, Tesla down 0.8%, Alphabet down 2.7%, and Amazon down 2%.
Read Also: Corporate Bonds on Sale: How to Invest in Cheap Apple, Disney, and Microsoft Bonds for Your Portfolio.