There are memorable dates in the life of every individual, and investors are no different. However, unlike the rest of us, investors mark those significant (or not quite) days on the economic calendar. One such day is just around the corner – the upcoming FOMC meeting scheduled for September 19-20, 2023. Let's explore the current market sentiment two weeks before the Federal Reserve's next decision.
Recent data indicates ongoing inflationary pressures and a tight job market. Fewer-than-expected jobless claims and a greater-than-expected increase in labor expenses for the second quarter have raised concerns about persistent inflation. Persistent inflation in market parlance means that the Federal Reserve may continue its interest rate hikes.
Latest comments from Fed official Susan Collins had a dampening effect on the markets as she hinted that the Fed might need to maintain higher interest rates for an extended period to combat inflation.
On new worries that the Federal Reserve could keep raising interest rates, the Nasdaq Composite experienced a decline on Wednesday, marking its third consecutive day in the red. The technology-heavy index saw a 1.1% drop, followed by a 0.7% decrease in the S&P 500 and a 0.6% drop in the Dow Jones Industrial Average.
Rates that stay higher for longer are generally detrimental to technology stocks. Tech companies often rely on substantial borrowing to fuel their growth. When interest rates rise, their debt servicing costs increase, impacting both revenue and bottom-line profits.
Speaking of tech stocks, Apple (AAPL) shares fell by 3.6% due to reports that China had prohibited government officials from using or bringing iPhones and other foreign-branded devices to their workplaces.
This move is part of China's strategy to reduce dependence on foreign technology and enhance cybersecurity. Apple and its devices enjoy widespread popularity in China, among both private individuals and government officials. China is not only a crucial consumer market but also a major manufacturing center for the tech giant, making such a decline hardly surprising.
Apple has faced government scrutiny before, both domestically and internationally. The company, along with other tech behemoths like Amazon (AMZN), Google (GOOGL), Meta Platforms (META), and Microsoft (MSFT), has been targeted by regulators in the United States and Europe for alleged anticompetitive practices and monopoly status.
As evident, the market encounters challenges from time to time. However, that's the nature of trading – you stay committed through thick and thin. And, for whatever it's worth, conducting your own research is always advisable before making any investment decisions.
