US Big Tech Rally Gains Momentum
The U.S. Federal Reserve (Fed) added momentum to the rally of big tech stocks on the 13th (local time) by signaling interest rate cuts next year. Apple, the leader of big tech, once again hit an all-time high.
On this day, Apple’s stock price closed at $197.96, up 1.67% from the previous session, on the Nasdaq stock market. This surpassed the previous all-time closing high of $195.83 on July 24, bringing the stock price close to breaking the $200 mark. With the stock price increase, Apple’s market capitalization swelled to $3.079 trillion, surpassing $3 trillion again.
Apple’s stock price, which has been on an upward trend since early this year, rose 52% compared to the beginning of the year. Expectations for an early rate cut due to economic slowdown factors such as cooling employment and easing inflation lifted investor sentiment, leading to continued strength alongside other major tech stocks. Bloomberg reported, "Market expectations that Apple can achieve a performance rebound next year, overcoming four consecutive quarters of declining hardware sales, are acting as additional momentum for Apple’s stock price increase."
On the day of the Fed’s sharp shift in interest rate direction, tech stocks cheered in unison. Most major U.S. tech stocks, including Apple, Nvidia (0.90%), Meta (0.16%), Amazon (0.92%), Alphabet (0.038%), and Tesla (0.96%), closed higher.
The seven major U.S. tech stocks known as the ‘Magnificent 7’ have risen by an average of about 70% since the beginning of the year, fueled by expectations for growth in artificial intelligence (AI). Despite pressures from soaring U.S. Treasury yields and geopolitical conflicts such as war, solid earnings have supported their relatively strong performance.
Among them, Nvidia, a representative beneficiary of AI, recorded the highest increase, soaring 224% since early this year, supported by heightened market expectations and upward revisions of earnings forecasts. Microsoft, the largest investor in OpenAI, which has led the AI boom with ‘ChatGPT,’ rose 67%.
At the Federal Open Market Committee (FOMC) regular meeting held on this day, the Fed unanimously decided to keep the target range for the policy rate unchanged at 5.25% to 5.50% for the third consecutive time. The statement softened its language, noting that economic activity has ‘slowed’ from a ‘strong’ pace and confirming that inflation is easing. The dot plot (a chart showing interest rate projections) suggested three rate cuts next year, while inflation forecasts based on core Personal Consumption Expenditures (PCE) were lowered to 2.6% and 2.4% next year, and economic growth forecasts were revised down to 1.5% and 1.4%.
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