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Key Takeaways
- Tech stocks pulled back in early trading Friday after Thursday’s rally helped propel major indexes to new highs in the wake of the Federal Reserve’s supersized rate cut.
- Some analysts suggested this week’s rate cut could set up tech stocks for gains heading into the end of this year and into next year.
- While the Fed cautioned against assuming more jumbo cuts lie ahead, markets are pricing in expectations the central bank will continue aggressively cutting rates this year.
Tech stocks pulled back in early trading Friday, hitting the brakes on the market’s rally in the wake of the Federal Reserve’s supersized rate cut this week.
The S&P 500 was down about 0.4% Friday after hitting record highs Thursday, with the energy and industrials sectors leading broad-based declines and its tech sector down about 0.6%. The tech-heavy Nasdaq fell 0.6%.
Semiconductor Stocks Lead Tech Declines
Semiconductor stocks including Onsemi (ON), ASML (ASML), and NXP Semiconductors (NXPI), were among the stocks leading losses on the major indexes, pulling the PHLX Semiconductor Index down 2%.
The Magnificent 7 stocks were mixed. AI darling Nvidia (NVDA), Amazon (AMZN), Microsoft (MSFT), and Tesla (TSLA) lost ground, while Meta Platforms (META) and Alphabet (GOOGL) were slightly higher. Apple (AAPL) advanced as its iPhone 16 hit stores.
Some Analysts Say Lower Rates Could Lead to Tech Gains
Some analysts have suggested this week’s cut could set the stage for tech stocks to gain over the last few months of the year and into next year, with Wedbush analysts writing yesterday that“the green light is back on for the tech growth trade.”
While the Fed cautioned this week against assuming more jumbo cuts lie ahead, markets are largely expecting the central bank to continue aggressively cutting rates this year, according to CME Group’s FedWatch tool based on fed funds market data.