Federal Reserve Chairman Jerome Powell plans to lower benchmark interest rates at a slower pace than expected, as indicated in a 60 Minutes interview with CBS. The revelation slowed the stock market's rally, as a previously expected rate cut in March became null and void.
Last month's stronger-than-expected job growth could keep inflation levels high in the near term and prevent the Fed from achieving its 2% inflation growth target if it cuts rates prematurely. .
“We would like to see further evidence that inflation is falling sustainably to 2%,'' Powell said in an interview.“Our confidence is growing. We will take the very important step of starting to cut interest rates.'' Moving forward, we just need a little more confidence.” ”
Only 37% of market participants expect a rate cut in March, down from 47% in the last week of January. A CNBC survey found that only 9% of respondents expected a rate cut in March. Market participants are currently expecting three rate cuts, or just a few more.
Despite stalled interest rate cuts, these Magnificent Seven stocks are poised to deliver strong returns in the short term.
tesla
After surging nearly 68% in 2023; tesla company (NASDAQ:TSLA) had a tough start at 224, with the stock down nearly 24% year-to-date. The company's total revenue for the fourth quarter of 2023 rose 3% year over year to $25.17 billion, but fell short of the London Stock Exchange Group (LESG) analyst consensus estimate of $25.16 billion. It didn't arrive. Last quarter, Tesla's EPS was $0.71, below the consensus estimate of 74 cents.
Tesla also announced in a statement that its growth outlook for 2024 has been revised downward as the company is now focused on expanding its business operations and production capacity. The stock was recently downgraded to neutral by Daiwa Capital analyst Jairam Nathan. He also lowered his price target for TSLA from $245 to $195, indicating the stock's current upside potential is just over 5%.
“We are currently in between two major waves of growth. We believe the first wave will begin with the global expansion of the Model 3/Y platform and the second wave will begin with the global expansion of the next generation vehicle platform. In 2024, our vehicle volume growth rate may be significantly lower than the growth rate achieved in 2023 as our team works to launch next-generation vehicles at our Gigafactory in Texas. ” the company said in a press release.
Tesla is currently undergoing a power struggle in its management, with CEO Elon Musk, who owns 13% of the company, aiming to increase his voting rights to 25%.
“I'm not comfortable letting Tesla become the leader in AI and robotics without having up to 25% voting control,” Musk said. “Enough to have influence, but not enough to overturn it.”
However, given Tesla's brand popularity and near-term growth prospects, the company is likely to return to growth once the internal conflicts within the management team are resolved. Piper Sandler is bullish on Tesla stock, currently giving it an “overweight” rating with a price target of $225, indicating an upside potential of more than 22%. Wedbush maintains a similar Outperform rating and a $315 price target, indicating more than 70% upside potential.
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meta platform
Meta Platforms Co., Ltd. (NASDAQ:META) is up about 30% since the beginning of the year, making it one of the best-performing Magnificent Seven stocks so far this year.
Despite stalled interest rate cuts, investors and analysts are bullish on the stock, as evidenced by META's recent surge. META stock has risen nearly 17% over the past five days.
The company recently began paying a cash dividend of $0.50 per share for the first time and expanded its share buyback program by $50 billion, or 5% of its outstanding shares.
Metaplatforms boasted impressive growth rates in its latest financial report, with net income for the fourth quarter of its fiscal year ending December 31, 2023 tripling year-over-year to $14 billion.
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The article “Interest rate cuts stall: Tech giants to watch in your investment portfolio” originally appeared on Benzinga.com.
