Fed Rate Cuts Boost Apple and Amazon Stocks in 2023
- The Federal Reserve's interest rate cuts are expected to positively impact various stocks, particularly benefiting small-cap stocks and consumers.
- A recent poll conducted by Benzinga revealed that Tesla was predicted to outperform during the rate-cutting cycle, with Apple and Amazon also receiving notable interest.
- Investors are increasingly looking at the Magnificent Seven stocks, with changing preferences based on different investment angles and the potential for growth following the rate cuts.
In September 2024, the Federal Reserve announced a decision to cut interest rates, a move that is expected to have significant implications for the stock market. This decision is anticipated to lower borrowing costs, which could particularly benefit small-cap stocks and consumers by making loans cheaper. As a result, mortgage rates, auto loans, and credit card fees are likely to decrease, creating a trickle-down effect that could stimulate economic activity. Benzinga conducted a poll to gauge investor sentiment regarding which stocks from the Magnificent Seven would benefit most from the rate cuts. The results showed that Tesla was favored to outperform, receiving 24% of the votes, while Apple and Amazon garnered 13% and 11%, respectively. This interest in Tesla may stem from its underperformance in the past year, prompting investors to see potential for recovery. The performance of the Magnificent Seven stocks has generally exceeded that of the SPDR S&P 500 ETF Trust, indicating strong investor confidence. As the year progresses, there is a growing appetite for these stocks, particularly as investors consider the potential for growth in the aftermath of the 2024 election. Overall, the Federal Reserve's rate cuts are reshaping the investment landscape, leading to a reevaluation of stock performance and investor strategies. The changing dynamics highlight the importance of adapting to economic shifts and the potential for significant returns in the stock market.