Big Fed Decision Today to Move Stock Market from Record Highs
The stock market is bullish thanks in part to tech stocks that are doing well recently as investors sentiment in AI's future improves.
Quick overview
- Stocks rose on Wednesday, with the Nasdaq gaining 0.9% ahead of the Federal Reserve's monetary policy meeting.
- The S&P 500 reached a new high this week, driven by strong performances from tech stocks, particularly Micron Technology.
- AI stocks have seen a boost due to positive earnings from Taiwan Semiconductor Manufacturing and a new deal between Advanced Micro Devices and OpenAI.
- The Federal Reserve is expected to maintain interest rates, as inflation remains above their target level.
Stocks ticked higher on Wednesday ahead of the Federal reserves monetary policy meeting scheduled for later in the day, with the Nasdaq gaining 0.9%.
The Nasdaq is leading U.S. stock gains for Wednesday, but the S&P 500 added 0.3% in premarket trading, while the Dow Jones remained almost flat from the previous day. On Tuesday, the Dow fell slightly while the Nasdaq and S&P 500 gained thanks to tech companies’ earnings.
AI stocks rose this week thanks to strong recent earnings performances from Taiwan Semiconductor Manufacturing (TSM) as well as a new deal between Advanced Micro devices and OpenAI. These developments have helped to allay fears over the decline of the AI market and increase consumer confidence in the tech market’s future.
Fed Decision and Stock Performance
It is highly unlikely that the Federal Reserve will issue a rate cut in January, especially after December’s recent cut. The inflation level is still elevated- at 2.7% from the last reading and not at the Fed’s desired 2%. So, the Fed is likely to keep interest rates as they are to ensure that the economy is not adversely affected.
The S&P 500 reached a record high on Tuesday, thanks in part to excellent growth from technology stocks. Micron Technology (MU) has been one of the best performing stocks on that index, with William Blair labelling the stock a “Buy”. Their investment in AI memory supply is making the company an important part of the growing AI tech niche.
Both Meta Platforms (META) and Microsoft (MSFT) are reporting earnings this week. They make up an important part of the Magnificent Seven stocks that indicate how the AI market is moving. Their heavy investments into artificial intelligence technology have brought the focus on investors and analysts on their earnings statements that are scheduled for this week.
Also reporting earnings this week is Apple (APPL), which has done extremely well in recent months thanks to high demand for their products. As market sentiment shifts in favor of AI stocks once more, Apple and other tech companies at the forefront of that market are seeing tremendous stock growth.
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