Gu Fu Po
09-18

Federal Reserve rate hikes cool inflation by tightening financial conditions, which naturally creates headwinds for stocks rather than relief.

* Lower Valuations: Stock prices represent the discounted value of future earnings. Higher interest rates raise the discount rate, shrinking the present value of future corporate profits—hitting growth stocks hardest.

* Higher Capital Costs: Squeezed margins, higher debt servicing costs, and reduced consumer spending slow revenue growth across industries.

* Yield Competition: High yields on risk-free Treasuries and money market accounts lure capital away from equities.

* Recession Risk: Hikes signal that the Fed is actively dampening economic activity, fueling fears of a corporate earnings slump.

True stock market relief typically arrives only when the Fed pauses or cuts rates, signaling an easing of monetary policy.

AI Earnings Lift QQQ; Will After-Hours Risk Reverse It?
QQQ rose 2.31% Wednesday as tech rebounded despite firmer October CPI. CoreWeave surged 24.71% in regular trading, alongside recoveries in memory and some chip stocks. Bulls see AI orders converting to deliveries; bears say one company’s growth and backlog don’t resolve industry financing costs, inflation, or rate risks. Nvidia’s governance report emerged only after the close, adding uncertainty for the next session. What must Nvidia’s response, Treasury yields, and CoreWeave’s deliveries show for the rebound to broaden?
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Comments

  • blinkix
    09-18
    blinkix
    Tech and consumer names usually feel it first. Gross margins look fine until refinancing and softer demand hit together, then earnings revisions start cascading lol
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