Imminent Fed Fee Hike Dents Technology Shares

  • Home
  • New
  • Imminent Fed Fee Hike Dents Technology Shares

Technology stocks fell sharply on news that the Federal Reserve is likely to raise interest rates as soon as this week, raising concerns about the cost of borrowing for many companies.

The Federal Reserve is widely expected to hike its benchmark rate on Wednesday for the third time this year, in an effort to contain the rising prices of commodities and wages. This move, however, is causing consternation among technology investors, as the sector is often open to liquidity constraints and has tended to underperform when interest rates rise.

The major technology benchmarks—the Nasdaq 100, S&P 500 Information Technology Index and Dow Jones U.S. Technology Total Stock Market Index—all posted significant losses in the first trading session after news of the rate hike hit markets. Notably, the NASDAQ Composite, a broad measure of companies across various sectors, fell 2.6%.

The most affected stocks included chipmakers and semiconductors, as well as Apple, Microsoft, and Amazon. Facebook and Alphabet, the parent company of Google, also saw a decline in share price following the announcement.

The rate hike is likely to cause unease among borrowers, as they will now have to pay more to finance their operations. This, in turn, could cause businesses to slow their investments in new technologies and products, affecting the sector’s performance in the short-term.

Ultimately, while the rate hike could impact technology stocks in the near-term, the sector will likely continue to grow in the longer term as companies continually invest in research and development to develop new products. Technology companies have also proven themselves to be resilient in difficult economic times, as evidenced by their performances over the past decade.

Investors are advised to exercise caution and monitor the sector carefully as the rate hike could lead to more volatility in the coming weeks.

  • Tech shares led the market place lessen on Monday as investors brace for the Fed to hike curiosity costs again. 
  • Chairman Jerome Powell is envisioned to strengthen fees by 25 basis details on Wednesday.
  • Mega-cap tech providers Apple, Amazon, Alphabet, and Meta will launch earnings this 7 days.

US stocks fell on Monday, with engineering stocks top the drop as buyers brace for a crucial Federal Reserve fascination fee determination and mega-cap tech earnings later this week.

The catalysts should make for a volatile week ahead, with the Federal Reserve slated to hike interest rates at its FOMC conference on Wednesday. Fed Chairman Jerome Powell is anticipated to enhance charges by 25 basis details, in what could be a single of the final will increase of the recent cycle.

Amid the envisioned Fed price hike, mega-cap tech providers will be reporting earnings benefits, with Apple, Amazon, Alphabet, and Meta all slated to launch outcomes. Microsoft noted earnings very last 7 days and presented a weaker-than-predicted outlook.

Of the 145 S&P 500 firms that have documented fourth-quarter earnings so significantly, 68% defeat financial gain estimates by a median of 5%, according to knowledge from Fundstrat.

This is where US indexes stood at the 4:00 p.m. ET close on Monday:

This is what else is happening this morning:

In commodities, bonds and crypto:

  • West Texas Intermediate crude oil fell 2.43% to $77.74 per barrel. Brent crude, oil’s worldwide benchmark, dropped 2.22% to $84.74.
  • Gold rose .47% to $1,938.40 per ounce.
  • The generate on the 10-yr Treasury climbed 4 foundation factors to 3.55%.
  • Bitcoin fell 4.44% to $22,666, though ether dropped 5.57% to $1,545. 

Supply url