Business
The Pain Points Taking a Fragile Tech Rally Down a Notch
AI chip player Broadcom gave a forecast late Wednesday for current-quarter AI revenue that fell below analysts’ forecasts. That spooked investors even though there wasn’t a particularly worrying explanation for it.
Then came an unexpectedly good jobs report for May. A healthier labor market could lead the Federal Reserve to keep interest rates elevated to combat inflation. Indeed, investors on Friday were pricing in an around 50% chance that the Fed could hike in October, up from a less than 20% chance a month ago. Higher rates wouldn’t be good for tech stocks that thrive when money flows freely through the economy.
Investors are also getting ready to put money into SpaceX ahead of its expected IPO next week. They are most likely to sell the so-called Magnificent Seven stocks, a group of big tech names, to rotate into SpaceX, Jefferies analysts said in a note.
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