更大幅度的降息会给科技“七巨头”—— The rate cut may not bring as much help to the 'Seven Giants' as in the past.
Currently, technology investors are assessing what impact the Federal Reserve's interest rate decision this week will have.
According to CME's FedWatch Tool data, the federal funds futures market expects a 33% probability of a 25 basis point rate cut at the FOMC policy meeting on September 18, and a 67% probability of a 50 basis point rate cut. A week ago, the probability of a 25 basis point rate cut was much higher than a 50 basis point rate cut.The Federal Open Market Committee (FOMC)A larger rate cut would have an impact on the seven technology giants -
$Apple (AAPL.US)$Please use your Futubull account to access the feature.$Microsoft (MSFT.US)$Please use your Futubull account to access the feature.$Alphabet-A (GOOGL.US)$Please use your Futubull account to access the feature.$Amazon (AMZN.US)$Please use your Futubull account to access the feature.$NVIDIA (NVDA.US)$Please use your Futubull account to access the feature.$Meta Platforms (META.US)$ and $Tesla (TSLA.US)$ - How big is the impact? Tracking the exchange-traded funds of the 'seven giants'. $Roundhill Magnificent Seven ETF (MAGS.US)$ It has risen by 34% this year, compared to a 17% increase for the 'seven giants'. $Nasdaq Composite Index (.IXIC.US)$ Nvidia, one of the 'seven giants', has risen by 135% this year.
Historically, interest rates have a greater impact on growth-oriented technology stocks because most of their value comes from future profit flows. Rate hikes will lower the present value of future profits, while rate cuts will increase the present value of future profits.
However, the help that rate cuts bring to the 'Big Seven' may not be as significant as in the past.
In the past few weeks, Barron's conducted a correlation analysis to determine the highest correlation between an index and the rise in short-term US Treasury bond prices (equivalent to a decrease in interest rates).
The analysis showed that the correlation between the 'Big Seven' and rate cuts (correlation coefficient of 0.43) was weaker than the correlation between [missing text].$NASDAQ 100 Index (.NDX.US)$the correlation between the Nasdaq 100 index and rate cuts was weaker than the correlation between [missing text].$S&P 500 Index (.SPX.US)$the correlation between the S&P 500 index and rate cuts was weaker than the correlation between [missing text].$Russell 2000 Index (.RUT.US)$The correlation between interest rate decline is 0.59. A correlation coefficient of 1 indicates that the trend of an index fluctuates in the same direction as the decline in interest rates.
Equally important is not to exaggerate the impact of the Federal Reserve's interest rate policy. The most important factor driving stock price increases is the company's fundamentals. If a technology company's earnings are far below expectations, a rate cut cannot prevent a significant decline in stock prices. Conversely, if a technology company's earnings easily exceed expectations due to its product cycle, the company's stock will rise.
Taking Nvidia as an example, the popularity of the upcoming Blackwell GPU product and its potential for generating significant revenue growth in 2025 will be much more important than what the Federal Reserve does.
Editor/Somer
