Tech Stocks Surge, Led by Apple, Amid Fed Rate Cut Uncertainty – Market Wrap
New York, NY – November 17, 2023 – U.S. stock markets closed higher today, buoyed by a strong performance in the technology sector, notably Apple, despite fluctuating expectations surrounding potential federal Reserve interest rate cuts. The Dow Jones Industrial Average, S&P 500, and Nasdaq all posted gains, though Amazon.com experienced a slight dip at the close of trading.
Market Performance Snapshot (as of 4:29 PM EST):
Dow Jones Industrial Average: Up 248 points (0.56%) to 44,216
S&P 500: Up 51 points (0.81%) to 6,391
Nasdaq Composite: Up 202 points (0.95%)
Amazon.com: Down 0.2%
10-year U.S. treasury Yield: Rose to 4.285% (up 0.041 percentage points/4.1bp)
2-year U.S. Treasury Yield: Rose to 3.762% (up 0.028 percentage points/2.8bp)
Apple Drives Tech rally:
Apple shares jumped 4% today, contributing substantially to the positive market sentiment.This surge extends a strong week for the tech giant, with a total weekly increase of 13.33% – the largest weekly gain since July 2020. The rally follows the resolution of uncertainty surrounding semiconductor tariffs and the announcement of a $100 billion investment in U.S. manufacturing facilities. Specifically,Apple was granted an exemption from tariffs imposed by the Trump management on certain semiconductor imports,a move that alleviated concerns about increased production costs. This investment is expected to create jobs and bolster domestic manufacturing capabilities.
AI and Market Dynamics:
The positive momentum was further fueled by OpenAI’s release of Chat GPT 5, showcasing improved performance and continued investment in artificial intelligence. The Nasdaq Composite reached a new all-time high consequently of the tech sector’s strength.
However, the market experienced a brief pause earlier in the day following comments from former President donald Trump, who indicated he was considering up to ten candidates for the next Federal Reserve Chair. This introduced uncertainty regarding the future direction of monetary policy. Potential candidates mentioned in reports include James Ballard, President of the Federal Reserve Bank of Richmond, and Mark Turrin, a former economic advisor to President George W. Bush. The uncertainty was short-lived, with a subsequent wave of bargain-hunting driving the indices back upward.Sector Performance:
technology and telecommunications services led the gains, rising by more than 1%. Conversely, industries, real estate, and utilities experienced declines.
Individual Stock movements:
Trade Desk (TTD): Shares fell 38% following a forecast of slowing sales growth in the third quarter.
under Armour (UA): The sports apparel company dropped 17% due to a lowered earnings forecast for the third quarter.
* Pinterest (PINS): The social media platform declined 10% following its second-quarter earnings report.Federal Reserve Rate Cut Expectations:
According to the CME FedWatch Tool, the probability of a 25 basis point (bp) rate cut by September has decreased to 90% from previous levels.The likelihood of a 75 bp rate cut by December also decreased slightly, from 48% to 44.9%.This suggests a growing expectation that the Federal Reserve will maintain higher interest rates for a longer period.
Evergreen Context & Future outlook:
The recent market performance highlights the critically important influence of technology companies, particularly Apple, on overall market trends. The ongoing investment in U.S. manufacturing and the advancement of AI technologies are key drivers of economic growth. Though, the market remains sensitive to signals from the Federal Reserve regarding monetary policy, as interest rate decisions have a substantial impact on borrowing costs and investment activity. Investors will be closely monitoring upcoming economic data releases and Federal Reserve communications for further clues about the future path of interest rates.
Source: Yonhap News,Foreign Sources,Chicago Product Exchange (CME) Ped Watch Tool.
