Technology Stocks Performance: Technology and Monetary Policy Impacts: The U.S. stock markets have witnessed significant changes recently,
driven by large-scale sell-offs in major technology stocks, which negatively impacted vital indices.
On the other hand, recent economic data has bolstered the Federal Reserve’s cautious stance on interest rate cuts.
Despite these challenges, U.S. stocks have demonstrated resilience and outperformed their global peers.
Contents
Technology Stocks Performance
Describing the Tech Turmoil
Economic Data and Interest Rate Outlook
U.S. Stock Market Forecasts
U.S. Market Outperformance Internationally
Seasonal Trends and Momentum
Global Flows and Election Impacts
Technology Stock Performance and Market Indices
The sell-off halted a seven-day rally that had propelled the S&P 500 to record highs.
Bloomberg’s Magnificent Seven Index, comprised of
Meta, Tesla, Nvidia, Microsoft, Amazon, Alphabet, and Apple declined by approximately 1%,
led by Nvidia’s losses.
Dell and HP shares dropped by over 11%, disappointing investors anticipating a recovery in the personal computer market.
Additionally, CrowdStrike Holdings Inc.’s stock fell by 4.5% after issuing weaker-than-expected earnings forecasts.
Describing the Tech Turmoil
Jonathan Krinsky of BTIG described the current situation as “tech turmoil,”
highlighting concerns about the relative underperformance of technology stocks for 2025.
However, he noted a positive aspect: a shift in momentum toward other market sectors,
helping to maintain trading diversity.
Economic Data and Interest Rate Outlook
Economic data revealed an increase in the Federal Reserve’s preferred core inflation
measure in a light trading session ahead of the Thanksgiving holiday.
Although it aligned with expectations, core personal consumption expenditures rose by 2.8% compared to October of last year.
Separate data indicated that the economy continues to expand at a robust pace.
These figures support recent comments from Federal Reserve officials,
emphasizing that there is no urgent need to cut interest rates as long as the economy keeps expanding and the labor market remains strong.
Brett Kenwell from eToro noted that overall inflation is moving in the right direction but added,
“The lack of more definitive moves could lead investors to reassess their bets on future interest rate cuts.”
On the other hand, Quincy Krosby from LPL Financial highlighted that
“recent efforts to stabilize prices have faced challenges due to persistent inflation and adverse conditions impeding progress.”
U.S. stock markets experienced declines, with the S&P 500 down 0.4%,
the Nasdaq 100 dropping 0.9%, and the Dow Jones Industrial Average slipping 0.3%.
Meanwhile, yields on 10-year U.S. Treasury bonds fell by five basis points to 4.25%.
Conversely, the Bloomberg Dollar Index dropped 0.6%, while Bitcoin registered gains.
U.S. Stock Market Forecasts
JPMorgan Chase’s equity strategy team, led by Dubravko Lakos
Bujas, after the departure of long-time leader Marco Kolanovic in 2024,
adopted a positive outlook on U.S. stocks.
Lakos-Bujas set a new year-end 2025 target of 6,500
points for the S&P 500, exceeding Bloomberg’s average forecast of 6,300 points.
He noted, “The ongoing geopolitical uncertainty and evolving policy agendas
add significant complexity to the outlook.
However, opportunities are likely to outweigh risks.”
U.S. Market Outperformance Internationally
The S&P 500 has risen nearly 25% in 2024,
achieving multiple record highs and significantly outperforming the MSCI World Ex-USA Index.
The valuation gap between U.S. and international stocks has widened,
U.S. equities trading at a 60% premium based on forward price-to-earnings ratios.
Seasonal Trends and Momentum
After achieving its 52nd record high this year, the S&P 500 appears to be taking a pause.
Seasonal trends suggest continued momentum. Since 1950,
the index has posted an average gain of 1.8% between Thanksgiving
and year-end, ending positively in 70% of cases.
Adam Turnquist of LPL Financial highlighted that when the index is up
for the year by Thanksgiving, the average year-end gain increases to 2.1%, with a 75% likelihood of positive outcomes.
Global Flows and Election Impacts
Emmanuel Cau of Barclays noted increased U.S. equity inflows post-elections and a resurgence in retail trading activity.
Meanwhile, European equities have faced sustained selling pressure.
Despite strong U.S. inflows from long-term and retail funds,
Cau observed limited profit-taking by hedge funds and systematic strategies.
He concluded that investor sentiment has not yet fully aligned with the broader market recovery,
indicating that optimism remains somewhat constrained.
Technology Stocks Performance: Technology and Monetary Policy Impacts
