Tech stocks wobble on rising yields and chip demand worries ahead of Fed decision – Stock Markets
Stocks slide as Treasury yields advance ahead of FOMC rate decision
Worries over chip demand outlook casts shadows over AI growth prospects
Instacart validates tech IPO resurgence, but can the excitement last?
Undoubtedly, the main event of the week is the FOMC interest rate decision later on Wednesday, which will be accompanied by the updated dot plot and a summary of the latest economic projections. Markets are convinced that the Fed will hold rates steady, so all eyes will fall on FOMC members’ anticipation of the future interest rate trajectory as inflation fears have returned.
More precisely, by combining the updated economic forecasts and the new dot plot, investors could assess whether the Fed will hike one more time at the November meeting and if interest rates should remain higher for longer to tame a secondary inflationary wave. Lately, surging energy prices and the US auto union strikes have been underscoring the case of inflation getting stickier, which has in turn propelled Treasury yields at their highest levels since 2007 in the anticipation of a more aggressive Fed.
![](https://www.xm.com/wp-content/uploads/2023/09/Nasdaq-and-yieldss.png)
Generally, when yields move higher, risky assets such as stocks become less attractive than bonds from a risk-return perspective. Besides that, high interest rates also infuse upside pressure on the US dollar, which is a devastating development for the Nasdaq 100 that generates 60% of its revenue overseas. Finally, growth stocks seem to be in the most vulnerable position as their value relies heavily on the discounted future cash flows.
Softening chip demand could weaken the AI narrativeApart from the deteriorating macro backdrop, some news regarding slowing chip demand acted as an additional headwind for the tech sector. The leading chipmaker TSMC is said to have urged its suppliers to delay the delivery of some advanced chipmaking materials due to concerns over fading demand. On a similar note, Intel’s shares fell more than 4% after the management cited that chip demand from data centres has been soft, leading to excess inventories.
Overall, the lower-than-expected demand for chips is ringing some bells to the AI enthusiasts, hinting that markets might have overpriced the prevailing trend’s growth potential. However, it is still too early to draw conclusions as the trade war between the US and China could easily flip things around and even create a chip shortage in the future.
Tech IPOs stage a solid comeback, but traders should remain cautiousAfter a prolonged period of IPO drought, it seems that tech startups are trying to capitalise on the AI mania and boost their valuations. For instance, UK chip designer, Arm, went public last week, with its deal being six times oversubscribed and the stock price jumping 25% above the target price. However, all these gains evaporated in less than a week, suggesting that investors were only focused on its AI status and neglected the vast premium.
Similarly, a grocery delivery group, Instacart, had gained more than 40% in its Wall Street debut before closing only 10% above its offering price. The aforementioned examples underscore investors’ renewed appetite for tech startup listings, but for now it seems that the AI mania is tempting them to accept excess premiums or overoptimistic growth projections.
Nasdaq drops below 50-day SMAFrom a technical standpoint, the Nasdaq 100 fell below its 50-day simple moving average (SMA), which had acted as strong support in the past week. Can the Fed inflict more damage?To the downside, further declines could cease at the July support of 14,924 ahead of the August bottom of 14,557.
Alternatively, a dovish surprise may shift attention to the September high of 15,618 before the bulls attack the 2023 peak of 15,932.
免責聲明: XM Group提供線上交易平台的登入和執行服務,允許個人查看和/或使用網站所提供的內容,但不進行任何更改或擴展其服務和訪問權限,並受以下條款與條例約束:(i)條款與條例;(ii)風險提示;(iii)完全免責聲明。網站內部所提供的所有資訊,僅限於一般資訊用途。請注意,我們所有的線上交易平台內容並不構成,也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料,僅適用於教育/資訊類用途,不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議,或是交易價格紀錄,或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容,包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接,皆爲‘按原狀’,並作爲一般市場評論所提供,而非投資建議。請理解和接受,所有被歸類為投資研究範圍的相關内容,並非爲了促進投資研究獨立性,而根據法律要求所編寫,而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊,相關詳情請點擊 這裡查看。