Fracturing 'Magnificent Seven' trade puts spotlight on megacap valuations

Diverging fortunes for the massive technology and growth names that have propelled the U.S. stock market higher are throwing a spotlight on their pricey valuations. The so-called "Magnificent Seven" are collectively trading at an average of 33 times their expected earnings for the next 12 months, up from 26 at the end of 2022, according to LSEG Datastream. That compares with a price-to-earnings ratio of about 21 for the benchmark S&P 500 index, which has risen over 7 per cent this year. Investors last year were happy to pay up for the megacaps, given the companies' solid balance sheets and…