Stocks rebounded from consistent poor performance over the last three months, rallying on Wednesday. The stock market rally came after the Federal Reserve decided for a second consecutive time to leave interest rates untouched. The apex bank’s decision has led investors and analysts to conclude that the central bank would keep interest rates this way until 2024.
The stock rally also affected Bitcoin (BTC) as the king coin hit $35,415, rising nearly 2.5% in the last 24 hours. The Nasdaq Composite rose 1.64% to 13,061.47, while the S&P 500 rose 1.05% to 4,237.86. The Dow Jones Industrial Average also rose, adding 0.67% or 221.71 points, to 33,274.58. Tech stocks led the market rally, with AMD (NASDAQ: AMD) rising 9.69% to close at $108.04 on the day. Also, Micron Technology Inc (NASDAQ: MU) and Nvidia Corp (NASDAQ: NVDA) also added 3.78% and 3.79%, respectively. Microsoft Corp (NASDAQ: MSFT) rose 2.35%, while Salesforce Inc (NYSE: CRM) climbed 1.53%.
Currently, it is unclear whether or not the Fed is in favor of increasing interest rates at the next Federal Open Market Committee (FOMC). Speaking on the possibility, Global X portfolio strategist Damanick Dantes said the Fed may be closer to its aim:
“Given the recent rise in yields, the Fed is less likely to raise rates in December, with the possibility of raising them later to keep reducing inflation. Tighter financial conditions since the September FOMC meeting have partially achieved the Fed’s goals.”
Interestingly, Fed Chair Jerome Powell has yet to completely dismiss a hike in interest rates for next month. At a recent press conference, Powell refuted the idea that the Fed would be unable to resume increasing rates after two consecutive pauses.
Tech Stocks Have Enjoyed Rally in 2023
While stocks rose, bond yields fell. The 10-year Treasury yield dropped lower than 4.8% after it had crossed 5% last month. Also, the 2-year Treasury yield fell under 5%.
Some tech stocks have enjoyed a general rally owing to rising interest in artificial intelligence (AI). Despite concerns in some quarters that the rise in tech stocks is a bubble, analysts have come out to support the potential of AI in the tech market. Last month, global investment financial services giant Goldman Sachs (NYSE: GS) explained that although current stock valuations are high, the market is “still in the relatively early stages of a new technology cycle that is likely to lead to further outperformance.”
Back in July, TV personality, author, and former hedge fund manager Jim Cramer encouraged investors to stick to the “Magnificent Seven” stocks. Cramer believes these stocks have enough resilience to cope with heavy market movements and keep to heavy price targets. The stocks are Tesla Inc (NASDAQ: TSLA), Amazon.com Inc (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOGL), Apple Inc (NASDAQ: AAPL), Meta Platforms Inc (NASDAQ: META), Microsoft Corporation, and Nvidia Corporation.
Last week, the Magnificent Seven lost a combined $280 billion after reports suggested a possible recession. While some like Apple lost 1.35%, others, including Alphabet, fell over 9% and lost about $180 billion. Microsoft was the only one of the seven that gained, rising more than 3%.