CQG News | How Rising Rates Could Influence Tech Earnings
Summary
• Rising rates tend to hurt growth stocks, but across the last five rate hike cycles, the Nasdaq median gain was nearly 27% • Inflation and supply chain constraints will continue to be a theme, and earnings forecasts may be muted as a result When I last covered the NASDAQ on March 23, it was in the midst of a rally that pulled it out of bear market territory for the year. Higher rates can slow down businesses’ cash flows and stunt their reinvestment into innovation and growth prospects. During times of uncertainty, investors turn towards more steady companies, just as they generally look to the fixed income markets to invest in safer assets. However, there is no real data to show that that decision is warranted given equities’ performance during past rate hike cycles. However, fundamentals in big tech remain strong and will look to provide support for a resurgence in their respective stock prices.
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