June 28th 2023, 2:39:46 pm

(about 3 months ago)

Tech stocks slip

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The rally of the North American stocks is paused as more investors take profit of the recent tech-driven rally and markets forfeit the rate cut scenario by US Fed in 2023. S&P 500 and Nasdaq lost 1.83% and 2.58% in the past five days and Canada’s S&P/TSX is down 1.75%. 

The recent market rally is ignited by the tech sector as more companies bring the promise of higher earnings supported by the employment of Artificial intelligence in their business. The leaders of the subject including Microsoft, Apple, and Nvidia saw their shares soaring in the past month and the overall tech sector is up 37% in 2023. Last week, however, was the worst day for the tech-heavy Nasdaq index since March.

The US central bank Chairman, Jerome Powel, reiterated last week that there are at least two more hikes ahead in 2023 to control the sticky core inflation. The notes impacted the markets’ belief that the central bank is just bluffing and they may have to even lower rates by the end of the year.

The bulls consider the current pullback and rest a healthy sign for a market rally. Considering US central bank officials’ notes and ongoing turmoil in Russia, the magnitude of the pullback is promising. 

The so-called Russian coup is shrugged off so far by the markets and seems to have little effect as long as commodity prices do not spike, causing market volatility. The developments remain to be seen as more uncertainty may be introduced to the markets in the coming weeks.