Why Amazon, Nvidia, and Meta Platforms Are Climbing Greater At the moment


What happened

The broader market rebounded this morning after last week’s massive sell-off, and that helped boost share prices for many tech stocks today. The result was Amazon (AMZN 2.26%) gained 3.8%, NVIDIA (NVDA 6.30%) increased by 6.5%, and meta platforms (META -2.91%) up as much as 2.5% and had gained 0.7% as of 11:07 am ET.

Investors appeared to be regaining some optimism that the market may be near the bottom and began buying up some tech stocks again.

so what

Stocks tumbled last week after the Federal Reserve hiked the federal funds rate by 75 basis points, the highest rate hike since 1994. As investors digested that hike, they also expected another rate hike of the same amount at the next Federal meeting reserve in July.

Image source: Getty Images.

Amazon, Nvidia, and Meta stocks weren’t immune to sell-offs, and they all tumbled last week as well.

Technology stocks have been particularly vulnerable to negative investor sentiment of late, as the sector is generally viewed as more speculative than some other forms of investment.

Amazon, Nvidia and Meta fell as investors fear rate hikes could trigger a significant economic slowdown or possibly even a recession. A slowing economy could hurt Amazon’s e-commerce sales and curb spending on Nvidia’s chips. Additionally, a slowdown could also hurt Meta’s advertising business.

But today’s gains from Amazon, Nvidia and Meta suggest that at least some investors believe the recent plunge in stock prices may have bottomed out. There’s no guarantee of that, of course, but some investors may think the market has already discounted aggressive Fed rate hikes.

What now

The Federal Reserve is trying to tame inflation – which has hit a 40-year high – and has indicated it is committed to further aggressive rate hikes to bring it down.

Fed Chair Jerome Powell said last week that “at our next meeting, either a 50 basis point hike or a 75 basis point hike looks most likely.” Powell added that he doesn’t expect hikes of 75 basis points to be common.

Essentially, that means the market isn’t out of the woods just yet. Even if some investors were pricing in another rate hike at next month’s Fed meeting, more negative news about the economy – or if inflation remains stubbornly high – could see the market continue to fall.

All of this means that while it’s good to see Amazon, Nvidia, and Meta rising today, investors should keep an eye on these tech giants over the long term. When their share prices fall again later this week, investors should remember that buying good companies — and holding them for at least five years — is the best way to make profits in the market.