{"id":65948,"date":"2023-09-27T07:32:59","date_gmt":"2023-09-27T11:32:59","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/higher-interest-rates-are-hammering-the-stock-market-what-could-save-it\/"},"modified":"2023-09-27T07:33:03","modified_gmt":"2023-09-27T11:33:03","slug":"higher-interest-rates-are-hammering-the-stock-market-what-could-save-it","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=65948","title":{"rendered":"Higher Interest Rates Are Hammering the Stock Market. What Could Save It."},"content":{"rendered":"
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While technology hasn\u2019t brought us the flying cars or cloned dinosaurs we thought we might find in the 21st century, it still surged ahead by leaps and bounds in recent decades. That should provide some comfort to investors bemoaning the market\u2019s recent rough patch, DataTrek Research says. <\/p>\n

This year\u2019s stock market rally has stumbled in the historically tricky month of August and so far in September. The
\n Dow Jones Industrial Average,<\/span><\/p>\n

S&P 500,<\/span>
\n and the
\n Nasdaq Composite
\n are all in the red this month, and none have hit a new 52-week high since the Dow\u2019s on August 1. <\/p>\n

\n

Chief to blame is interest rates\u2019 rapid climb that kicked off in 2022, after years of hovering at ultralow levels. With rates likely to remain elevated, some investors worry about they could continue to drag on stocks. But DataTrek Research Co-Founder Nicholas
\n Colas
\n reminds investors to look beyond interest rates and Federal Reserve policy. <\/p>\n

\u201cTech stock valuations may rise and fall with interest rates, but innovation doesn\u2019t care about the yield curve,\u201d Colas wrote Tuesday. \u201cAs markets struggle to adapt to higher rates in 2023, it is useful to remember that it is disruptive innovation which drives long-run stock market returns. Not the yield curve.\u201d <\/p>\n

The tech-heavy Nasdaq has had the biggest decline of the three major indexes in September. Colas, however, notes that the 1970s\u2014another time of higher rates and inflation\u2014was a golden age for technological advances, with the introduction of the HP-35 calculator and the
\n Apple
\n II personal computer, even as ultrasafe Treasuries sported yields even higher than today\u2019s. From its 1971 launch through the end of that decade, the Nasdaq not only rose nearly 50%, but outperformed the S&P 500.<\/p>\n

When it comes to longer-term market gains, 10-year Treasury yields have nothing on a decade governed by Moore\u2019s Law, which states computing power per dollar doubles every few years, Colas says.<\/p>\n

Framed that way, it\u2019s easier to understand why the so-called\u00a0Magnificent Seven\u00a0big tech firms\u2014Apple\u00a0(ticker: AAPL),\u00a0Amazon.com\u00a0(AMZN), Google parent\u00a0Alphabet\u00a0(GOOGL),\u00a0Facebook\u00a0parent\u00a0Meta Platforms\u00a0(META),\u00a0Microsoft\u00a0(MSFT),\u00a0Nvidia\u00a0(NVDA), and\u00a0Tesla\u00a0(TSLA)\u2014have surged. Enthusiasm about the transformative power of artificial intelligence and machine learning across industries has fueled investor interest.<\/p>\n

Put another way, we\u2019ve come a long way from pocket calculators since the 1970s, and several decades from now our current technology will look quaint. Investors\u2019 worries about the latest stock market stumble might look quaint in a few years, too. <\/p>\n

\u201cWhile interest rates and other macro considerations are certainly important, human innovation is the more powerful force in driving long-run equity returns,\u201d Colas concludes. \u201cAnd, thankfully, entrepreneurs and technologists don\u2019t care too much where 10-year Treasuries trade as they build the next batch of novel and disruptive businesses.\u201d<\/p>\n

Nor is he alone in arguing that Big Tech isn\u2019t done rallying yet, as technical patterns, like upward earnings revisions, are bullish signals for the industry.<\/p>\n

\u201c[T]echnological\u00a0disruption across industries is creating opportunities for investors to add longer-term portfolio growth potential,\u201d writes Solita Marcelli, chief investment officer Americas, UBS Global Wealth Management in a note Tuesday. \u201cIn the\u00a0technology\u00a0sector, we focus on disruptors in the software, internet, and infrastructure fields, as the impact of artificial intelligence broadens beyond enablers and platforms to also include software and solution providers.\u201d<\/p>\n

Technology\u2019s ability to continue transforming our lives and driving stock market returns almost makes up for the lack of airborne automobiles and un-extinct dinosaurs. Almost.<\/p>\n

Write to Teresa Rivas at teresa.rivas@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

While technology hasn\u2019t brought us the flying cars or cloned dinosaurs we thought we might find in the 21st century, it still surged ahead by leaps and bounds in recent decades. That should provide some comfort to investors bemoaning the market\u2019s recent rough patch, DataTrek Research says. This year\u2019s stock market rally has stumbled in […]<\/p>\n","protected":false},"author":1,"featured_media":65949,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-65948","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nHigher Interest Rates Are Hammering the Stock Market. 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