[Moo Brief] FOMC: Tech stocks pop on soaring Sep rate cut expectations - Time to take action？
On July 30, the highly-anticipated FOMC meeting took place, which raised expectations of a rate cut in September and kept the interest rate target range between 5.25% and 5.50%. Powell suggested that if inflation met expectations, there might be a rate cut in September. Recent data has strengthened their confidence that inflation is approaching the target of 2%. After the news was released, the US stock market had its largest single-day increase since February. $NASDAQ(NASDAQ.US$ closed up 2.64%, with the market sentiment once again turning bullish.
Expectations of a rate cut also stem from the fact that the US job market has started to slow down, with yesterday's ADP employment data showing a significant drop, marking one of the slowest months in the past two years. Last night, Powell stated that he would not tolerate a rapidly cooling job market. As a result, US Treasury yields have fallen across the board, with Treasury futures fully pricing in the possibility of a rate cut in September, and further anticipating another rate cut by the Fed before the end of the year.
![[Moo Brief] FOMC: Tech stocks pop on soaring Sep rate cut expectations - Time to take action？](https://ussnsimg.moomoo.com/sns_client_feed/77777022/20240801/1722484465096-b3327938c3.png/big?area=103&is_public=true)
➤ Positive market sentiments
Powell's dovish comments brought joy to the market. Led by chip stocks such as $NVIDIA(NVDA.US$, the US stock market rose sharply on Wednesday, with $NASDAQ(NASDAQ.US$ up 2.64%.
On July 31, $NVIDIA(NVDA.US$'s closing price surged by 13% to $117.02. As of 8 PM EDT, its after-hours price popped by 3.67% to $121.32.
$Tesla(TSLA.US$'s closing price rose by 4.24% to $232.07.
$Meta Platforms(META.US$'s closing price increased by 2.51% to $474.83. Yesterday, the company reported adjusted earnings of $5.16/share on revenue of $39.07B vs. estimates of $4.72/share on revenue of $38.34B. The firm beat most investor-watched segment figures, including spending less money overall on general Capital Expenditures.
Meanwhile, the US dollar and bond yields fell, driving strong rebounds in commodities priced in US dollars such as gold and crude oil. Gold broke through $2,500/ounce, hitting a new historical high.
➤ Sectors worth paying attention to
Consumer Staples, Real Estate, Financials, and Information Technology are sectors sensitive to interest rate changes.
![[Moo Brief] FOMC: Tech stocks pop on soaring Sep rate cut expectations - Time to take action？](https://ussnsimg.moomoo.com/sns_client_feed/77777022/20240801/1722485221674-b38cb6c2f4.webp/big?area=103&is_public=true)
✐ A low-rate environment can benefit the consumer staples industry as consumers have more disposable income to spend on non-discretionary items.
✐ The materials sector benefits from increased demand for infrastructure and development in a low-interest rate environment.
✐ Lower interest rates can make bond proxies like REITs and utilities more in demand.
✐ The real estate market becomes active as mortgage rates fall, making it more affordable for consumers to borrow money to purchase homes.
✐ Banks and financial institutions can benefit from increased economic activity, as a rate cut can lower borrowing costs and increase profitability.
✐ Growth stocks like technology companies can benefit from lower borrowing costs and investors may be more willing to pay a premium for them in a low-interest rate environment.
As an investor, will the increased expectations of a rate cut impact your investment decisions? ![]()
Please drop your answer with reasonable comments, and you will receive 66 points. ![]()
![[Moo Brief] FOMC: Tech stocks pop on soaring Sep rate cut expectations - Time to take action？](https://ussnsimg.moomoo.com/sns_client_feed/77777022/20240801/1722493028025-2239afc316.webp/big?area=103&is_public=true)
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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mr_cashcow : Yes with the expectation of a rate cut certain sectors will greatly benefit from it as the cost of borrowing decreases![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Real Estate: Lower interest rates make borrowing cheaper, increasing demand for rental shops and boosting REITS
Automotive: Reduced interest rates lead to lower car loan rates, stimulating car sales which will benefit EV stocks
Consumer Goods and Retail services: As borrowing becomes cheaper, consumers may increase spending on goods and services and in turn boost service provider's stock price
Financials: While rate cuts can reduce bank profit margins, they may also increase demand for loans and stimulate financial activities which in turn boost bank share prices
I will keep an eye out for the following:
Disclaimer: All the above are purely for educational purposes and are NOT financial advise, please DYOR/DD
010Leo : yes I'll review the stocks, heavily weighted on sreits, now entering bond fund to balance. maybe add financial etf? more $Moomoo (FUTU.US)$ ?
WanEH : When the central bank cuts interest rates to a certain extent, people may feel that it is not cost-effective to keep their money in the bank, as not only will the interest income be low, but it may also not keep up with the rise in CPI. At this time, some investors will consider transferring their savings to the stock market to realize asset appreciation.
102362254 : Sure. As an investor, I keep a close eye on expected rate cuts and market trends to understand how they might affect different types of investments. This guides me in adjusting my strategy for better investment choices.
Meme_Short_Queen : calamity often ensues euphoria, the negative return AI hype has peaked, yield curve remains inverted, inflation is going back up again, oil will soar. bloodbath in near sight.