Why Retail Traders Are Over the Mag Seven

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0:33Alex Ossola:Retail investors are over the magnificent seven mega cap tech stocks. They're just not what they're looking to for that aggressive, high growth stock. They're starting to realize that they're going to find that in other parts of the market, in newer AI plays. Plus, a legal challenge for the$81 billion Paramount Warner Brothers deal. And it's not just Spain. Winners of the World Cup might include ranch dressing. It's Monday, July 20th. I'm Alex Oseleff for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:16Alex Ossola:We begin this evening in Shanghai, where China's biggest artificial intelligence convention just wrapped up. And that's where Alibaba previewed its newest AI model that it says is among the most powerful available today. The company said Quen 3.8 Max is second only to Anthropics' most cutting-edge model, Fable 5, and that Alibaba plans to make its model available for developers to download and modify soon. Chinese AI models are gaining traction globally. Many of them are open source, and they're generally cheaper to run than Western models. Another Chinese company, Moonshot AI, spooked tech stocks in the U.S.

1:52Alex Ossola:this past Friday with the launch of its Kimi K3 model. Speaking of tech stocks, the companies that make up the MAG-7 have dominated the U.S. stock market. But now their hold on individual investors seems to be loosening. The market data firm Vanda Research says retail traders are buying fewer shares of Microsoft, Apple, Amazon, Meta, NVIDIA, Alphabet, and Tesla. Instead, traders are flowing to newer AI trades with names that might not be as famous. Journal Markets reporter Hannah Aaron-Lang joins me now with more. Hannah, why is there less of this appetite for MAG7 from retail investors right now?

2:27Alex Ossola:The MAG7 kind of ruled the AI trade, especially for the first few years that this has taken hold on Wall Street. Retail investors are turning a lot of their attention away from these trillion-dollar firms that are funding the artificial intelligence build-out. And they're looking towards companies making the pieces and components that are part of that, right? So those making the chips, think like Micron or SK Hynix, companies that make cooling systems for data centers, power providers, and even more far-flung things like space companies and quantum computing. It's like who could be the next set of big beneficiaries as we all start to use AI and integrate it into our everyday lives.

3:11Alex Ossola:OK, that is all to say, though, that Max 7 is still hugely influential in the market, right? It's not like they're going away. I mean, what does less attention on those companies mean for the broader market? It's not that retail investors are completely turning away from the Magnificent 7 or from mega cap tech companies as a whole. A lot of them still maintain significant exposure to these companies, even if they don't own the individual stocks. These stocks make up like 36 percent of the entire S &P 500 index. So you're heavily exposed to mega cap tech just by investing in the major U.S. stock indexes.

3:47I think this just means that investors are starting to think about the MAG-7 a little differently. There's still a core holding in their portfolio, but they're just not what they're looking to for that aggressive, high-growth stock. They're starting to realize that they're going to find that in other parts of the market, in newer AI plays.

4:08Alex Ossola:That was WSJ Markets reporter Hannah Aaron-Lang. Thank you, Hannah. Thank you for having me. Oil prices finished higher today. Brent crude futures added more than 1 percent to about$89 a barrel. Traffic in the Strait of Hormuz remains crippled, and the Houthi militia in Yemen today said they would blockade Saudi shipping. That could cut off the Red Sea oil route that Saudi Arabia is using to get around the blockade in Hormuz. Those Middle East tensions and AI anxieties also weighed on stocks. The major indexes were slightly lower today, the Dow leading the losses and finishing down 0.6%. In California, the$81 billion merger of Paramount and Warner Brothers Discovery hit its first major speed bump today.

4:53Alex Ossola:A federal judge has granted a temporary restraining order for 14 days that stops the companies from closing the deal. The court is considering an antitrust challenge from a dozen states, and a hearing for a preliminary injunction that would block the deal while the antitrust case proceeds is scheduled for August 3rd. Paramount says it's confident that it can prove that the antitrust arguments have no merit. If the litigation extends beyond the end of September, it could become expensive for Paramount. It agreed to pay Warner shareholders a fee of about$650 million every quarter if the deal didn't close by September 30th, until the deal does close.

5:28Alex Ossola:And the movie theater chain AMC Entertainment posted a record$1.6 billion in revenue for the second quarter. That's a 14 percent jump from the previous year, driven by a stronger domestic box office. Its stock closed up about 27 percent. Coming up, what the U.S. service members' deaths could mean for the future of the conflict with Iran. Plus, how much coffee should you drink for a healthy heart? It's probably more than you think. That's after the break.

6:02Alex Ossola:We're learning more about the deaths of the U.S. service members killed at a Jordanian airbase over the weekend. The Iranian missile attack that killed two soldiers from Army Air and Missile Defense units was one of three separate strikes in 24 hours on the Muwafak Salty airbase. I'm joined now by WSJ national security correspondent Michael Gordon. Michael, what do we know about how these deaths happened? The U.S. has been building up its capabilities in the region. Iran has been making a concerted effort to target bases in Jordan where U.S. aircraft and personnel are based. And they managed to get a few missiles through at a major airbase known as MSAB.

6:42Alex Ossola:This MSAB base, how important is it for the Iran conflict? It's become increasingly important. And there are a couple reasons for that. First, the United States has a very close security and foreign policy relationship with Jordan. It's a main provider of military and economic aid to the kingdom. And as a consequence, the Jordanians give the Americans a lot of leeway and access over flight and basing. So that's one reason the U.S. has put a lot of assets in there. Another reason is it's not as close to Iran as countries like Kuwait and Bahrain, which are getting hit pretty hard by Iranian short-range missiles.

7:21You're able to defend it somewhat better with anti-missile systems. But it's not an impermeable defense. And what happened over the weekend was three Iranian ballistic missiles managed to get through and hit the facility. They hit a hangar. They landed near a gym. And they also hit a housing area, which is densely packed with U.S. personnel.

7:44Alex Ossola:What does this show us about where the conflict might go from here? It's an ominous development because President Trump said today in a social media post that the Iranians will pay for this action. And it comes at a time when the U.S. is gearing up for even more forceful use of air power. At the same time, there are no doubt some peace efforts going on or at least diplomatic efforts. So one can't say 100 percent that it's going to escalate, but it sure looks like it could. WSJ national security correspondent Michael Gordon. Michael, thanks so much for joining us. Thank you. A spokesman for U.S.

8:19Alex Ossola:Central Command, which oversees American forces in the Middle East, declined to comment on the battle damage caused by the Iranian attacks.

8:29Alex Ossola:Republican Senator Darlene Graham, the sister of Lindsey Graham, said she plans to run for a full Senate term to replace her brother in South Carolina. She was appointed last week by the state's governor to finish her brother's term, which ends in January. Graham had never held public office before. She told Fox News' Sean Hannity how she arrived at the decision to run. With the love of my family, with the support of his staff, I know I'm a hard worker. I learned that from Lindsey. He cared about the people of this state. I've worked for almost 30 years for the people of this state. I want to talk about that in a minute.

9:06I feel like I can do it. I feel an inner peace about it.

9:11Alex Ossola:Graham has President Trump's backing, a key endorsement in the state. The primary is on August 11th. You may have heard that Spain beat Argentina to win the World Cup yesterday. Another big winner? FIFA. U.S. viewership broke records for the tournament. And now FIFA wants to cash in on the media rights for the next World Cup. Some estimates say U.S. companies could pay as much as$4 billion total for the media rights to the next two tournaments. Others say that's wishful thinking and maybe even double what will eventually be paid. For context, Fox paid about$485 million and Telemundo paid$600 million for the current rights package.

9:50Alex Ossola:That included the women's tournament in 2023 and this year's Men's World Cup. For more on who won what from this year's World Cup, I'm joined now by journal reporter Owen Tucker-Smith. Owen, some cities got a big lift from the tournament, others not so much. Which areas got the biggest boost? So New York and L.A. are just these huge cities. And so the World Cup just takes up a smaller percentage of their overall tourism, whereas slightly smaller cities like Philadelphia or Kansas City, it's going to be more of a boost. It's going to be a few weeks until we really know the overall impact on the U.S., but we're already seeing this kind of split.

10:27Alex Ossola:Were there any other unexpected winners and losers from the World Cup? One thing is that these foreign tourists, some of them have gone viral for becoming obsessed with, you know, American staples of life, like ranch dressing and Chick-fil-A and big suburban houses. Those have gotten a lot of attention on social media. People have made a lot of videos filming themselves eating American-sized portions for the first time. Some of it, I think, is laughing at us. Some of it is laughing with us. I love ranch. I taste it here. It's delicious. and I take two bottles with foam. That was absolutely banging, to be fair.

11:04The Chick-fil-A needs to be in UK more. Just discovered it. Ranch is my new favourite thing. We just don't do chicken like this in the UK. Chef's kiss. Ranch dressing and Chick-fil-A might have won the World Cup. We've also seen some losers. There are some brands that might have been caught off guard by how into the World Cup Americans get. It's always unclear how much American fans are going to suddenly care about soccer. The Journal had a great story about Nike, which failed to realize how many people were going to want jerseys for the U.S. men's team. And they ran out very quickly and it took them a while to restock.

11:39Alex Ossola:That was Journal reporter Owen Tucker-Smith. Thanks, Owen. Thanks for having me.

11:48Alex Ossola:And finally, good news for the Java addicts among us. Most adults are fine to have five cups of coffee per day, and it may even benefit your heart. That's according to a new scientific statement from the American Heart Association. It says that three to five eight-ounce cups a day, or around 400 milligrams of caffeine, is linked to a lower risk of heart disease, heart failure, stroke, and type 2 diabetes. Scientists are still not sure why this is the case, but the sweet spot seems to be two to four cups. So which of our Wall Street Journal colleagues is nailing it? So far today, I had two cups of coffee and one full thermos of coffee.

12:26It's one of those days. I only have one cup of coffee a day. I have had three so far, and I am currently on number four. It has to be black coffee without sugar and without milk and none of the fruit food drinks from Starbucks. That's not acceptable.

12:41Alex Ossola:Michael Gordon, who you heard at the end there, has the right idea. The researchers say that sugar or creamers with a lot of saturated fat can dilute or eliminate the potential health benefits of coffee. But if you need an excuse to reach for that fourth or fifth cup today, well, now you've got one. And that's what's news for this Monday afternoon. Today's show is produced by Anthony Bancey and Danny Lewis with supervising producer Tali Arbel. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

13:20This podcast is brought to you by ReliaQuest. Cyber criminals are constantly attacking. They want your data. They want your identity. They want your innovation. ReliaQuest fortifies your business with Agentic Defense, AI that detects, contains, and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest, agentic defense for the enterprise. Learn more at ReliaQuest.com. That's R-E-L-I-A-Q-U-E-S-T dot com.