Tech Stocks Fall on AI Investment Concerns; Bonds Fall Despite Fed Interest Rate Cut
Good morning, and welcome to Winter Wonderland!
The Dow (+1.0%), NASDAQ (-1.6%), and S&P 500 (-0.6%) were mixed for the week. Meanwhile, taxable bonds were down about 0.2% and tax-free municipal bonds were virtually unchanged. The 10-year Treasury yield rose 0.05% to end the week at 4.19%.
The biggest news of the week was the Fed cutting interest rates by 0.25%, as expected. The markets didn’t react to the rate cut, but investors were enthusiastic about the Fed comments afterward, when the Fed chairman said the Fed would be buying short term Treasuries, which is considered stimulative for the economy. The Fed also expressed its concern with a weakening labor market, which was confirmed with jobless claims rising to 232,000, well above the estimate of 192,000 expected. The big market driver was a result of concerns in the artificial intelligence (AI) space, as Oracle reported that its $300 billion investment in AI hasn’t turned out the way it had hoped. As a result, AI investment concerns rippled through the markets, as the Magnificent 7 AI-related stocks were down 2.2% for the week, with only one of those seven stocks showing a gain.
Economic data will finally be pouring in this week after the October government shutdown. Key data for the October and November jobs reports will be released on Tuesday, and the key inflation measure – Consumer Price Index (CPI) for October and November will be released on Thursday. Beyond that, market volume usually slows down because of the holiday season, and picks up after the new year.
Have a great day and terrific week and Happy Hanukkah to those with whom it applies.
Source: Yahoo Finance
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The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
