When in January, the Federal Reserve hinted it would start lowering the interest rate levels, by targeting a lower Federal Funds Rate, the stocks of many not profitable, money loosing technology companies went up twice or thrice even.
The logic is that since these money loosing technology companies like Snap Inc, Lendingtree Inc need to borrow money or raise money from venture capital funds to survive, lower rates will benefit them enormously. Venture capital funds' amounts are also very sensitive to interest rates level, because venture capital funds compete with interest rate levels on US treasuries to raise money.
However, in recent weeks, inflation rates started rising again and the Federal Reserve backtracked and now Wall Street investment banks expect the first lowering of interest rates by the Federal Reserve to be in June 2024, not March 2024.
Respectively stocks of loss making, bonded to growth technology companies fell. Snapchat, for example, went down circa 30 % yesterday, after reporting fourth quarter, 2024 earnings. Lendingtree Inc's also fell a lot in the recent weeks.
The Federal Reserve will lower interest rate four times in the election 2024 year, according to Wolfteam Ltd.'s projections and estimates.
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