Market volatility spurred by recession fears rocked the tech sector last week, causing large-cap names to come under pressure. Aptus Capital Advisors portfolio manager David Wagner joins Wealth! to discuss the state of the tech industry sa recession fears circulate.

If July's Consumer Price Index (CPI) comes in higher than expected and interest rates start to come down, Wagner argues that the Magnificent Seven will "continue to be that funding mechanism, much like what we saw in the middle of July."

"You saw that capital flow from the Magnificent Seven to some of the smaller-cap cohorts to more of the real estate investment trust areas, the utilities, and even some of the more consumer cyclical and the consumer discretionary area," he says. Wagner notes that the flow of capital will remain with the Magnificent Seven because "there's so much resiliency, there's so much pricing in elasticity that a lot of those companies have."

While the safe move 10 years ago was to invest in staples like utilities, Wagner believes it is now in AI tech names: "The amount of profit margin and operating leverage that a lot of these Magnificent Seven companies have, that's where the flow of capital is going to go if investors are looking for safety. And so if you think that there's going to be volatility in the market, not just here in the near term, but over say the next three to four months, I'd be putting my capital in the Mag Seven."

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This post was written by Melanie Riehl