Article Hero

Tech Sell-Off Weighs Down Wednesday Trading, With Amazon and Apple Losing 2% Each

DJIA
Miguel A. Rodriguez
Miguel A. Rodriguez
09 February 2023

The Fed's next steps are being made by evaluating the CPI, economic growth, and looking into the long-term effects of job market improvements. 

A sell-off in technology stocks, with Amazon (AMZN) and Apple (AAPL) both falling 2%, weighed heavily on Wednesday trading, sending the Nasdaq index down slightly more than 1%. Furthermore, the Federal Reserve's most recent series of speakers reinforced the notion that interest rates must continue to rise in order to combat inflation. While much will depend on the data, markets remain vulnerable to interest rate volatility, as Powell pointed out.  

Related: Dow Jones analysis and price predictions 

On the bright side, Federal Reserve Bank of New York President John Williams stated that market forecasts for terminal interest rates are very reasonable, which reinforces the general consensus and should reassure investors. 

However, Williams added that policy might need to be tightened for a few years, which Fed Governor Lisa Cook confirmed. 

In short, a more precise scenario for the Fed's next steps, but with the possibility that interest rates will remain high for an extended period of time, which would contradict the market's most widely held belief that interest rates will be cut by the end of this year. 

This will be determined in the short term by inflation figures such as the CPI of the United States, which will be released next Tuesday, and in the long term by how economic growth and the labor market evolve.  

If GDP figures and leading indicators of the economy show no signs of vulnerability and the labor market remains strong, the Federal Reserve is unlikely to cut interest rates at the end of this year, as the interest rate curve suggests. Hence, this would result in an increase in long-term market interest rates (bond yields), which would initially have a negative impact on the stock market or, at the very least, dampen a potential upward momentum. In these circumstances, the US dollar would suffer as well.  

The market consensus at the moment is that the US currency will continue to fall in the near future. Most analysts believe the EUR/USD will rise above 1.12, but if interest rates rise later, this trend may reverse.  

Related: EUR/USD analysis and price predictions 

EUR/USD price chart

Sources: Bloomberg, Reuters  

The information presented herein is prepared by CAPEX.com/eu and does not intend to constitute Investment Advice. The information herein is provided as a general marketing communication for information purposes only and as such it has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research.                                                                                                                            Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience, or current financial situation.Therefore, Key Way Investments Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the information presented herein. Past performance and forecasts are not reliable indicators of future results.

Share this article

How did you find this article?

Awful
Ok
Great
Awesome

Read More

Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books. 

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69.69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.