Has the Fed killed off the bull market in Tech?

Tech stocks traditionally don’t like rising interest rates, although, as the chart below illustrates, it’s not a perfect science. Over the last 12 months, the sector has roared ahead as a number of the mega-caps showed they could deliver earnings in a tough economic backdrop.  Plus, they’ve been anticipating “peak interest rates”, but the Fed’s recent hawkish commentary has raised questions about the timing of this view into Christmas and beyond – MM believes bond yields are indeed “looking for a top”, which should ultimately help growth stocks regain their mojo.

Our roadmap for US tech stocks has taken a deviation this week, but we still believe they are on track to make fresh all-time highs into Christmas. However, we continue to caution that we believe their rally since late 2022 is maturing, and we wouldn’t be chasing such a breakout if it unfolds. Overall, we don’t believe the Fed has “killed off the bull market in tech”, but they are making it extremely hard for them to power to new 2023 and all-time highs.

• We can now see the NYSE FANG+ Index testing the psychological 7000 level in the coming weeks – another 4-5% lower.

This morning, we’ve briefly updated our outlook on four major tech names, two local and two from the US – note we have deliberately focused on stocks we like into the current weakness in line with our overall bullish stance into Christmas following this current Fed inspired pullback.