• What prompted Powell to suggest rate cuts in September?
• What drove Meta’s strong Q2 results?
• Why did tech giants’ market caps drop in July?
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IN THE HEADLINES
Fed's Powell Hints at September Rate Cuts as US Inflation Cools
Fed Chair Jerome Powell indicated that the Federal Reserve might implement its first interest rate cut in four years as early as September, citing progress in reducing inflation and a cooler job market. Despite pressure from some economists and Democratic politicians, the Fed kept its key interest rate unchanged at 5.3%. Powell noted that a rate cut will depend on continued inflation decline. While an immediate impact is unlikely, as markets have already anticipated this move, lower rates are expected to reduce borrowing costs for consumers and businesses over time. The Fed's next meeting is scheduled for November, two days after the election. Read more
Meta Posts Strong Q2 Results, Shares Surge After Hours
Meta reported stronger-than-expected Q2 results, fueled by robust advertising revenue, which led to a surge in its shares during after-hours trading. Despite significant upcoming investments in AI, analysts remain confident in Meta’s financial stability. The company’s Q2 earnings reached $13.47 billion, or $5.16 per share, marking a 73% increase from last year, with revenue rising 22% to $39.07 billion. CEO Mark Zuckerberg highlighted Meta AI’s potential to become the most widely used AI assistant by year-end. Daily active users across Meta’s apps hit 3.27 billion in June. Meta anticipates Q3 revenue between $38.5 billion and $41 billion and expects substantial infrastructure costs to support AI advancements in 2025. Read more
Tech Giants See Major Market Cap Drop in July Amid Earnings Concerns
The market capitalization of major tech companies dropped sharply in July due to disappointing quarterly results and concerns over high valuations, leading investors to shift focus away from the AI sector. Despite early optimism that AI advancements would boost earnings, second-quarter reports showed that AI infrastructure investments resulted in rising costs with only modest gains. Microsoft and Alphabet experienced significant market cap declines, and Nvidia and TSMC also saw reductions. In contrast, Apple’s market cap surged due to positive outlooks for its new AI initiative, Apple Intelligence. Outside the tech sector, Eli Lilly's market cap fell due to competitive pressures, while Tesla's market cap increased on positive future growth prospects. Read more
TradeUP TIDBITS
How the 2024 Election Could Affect Your Portfolio
"The Federal Reserve is expected to lower its benchmark interest rate in the coming months after holding it at a 23-year high. This reduction will have mixed effects on personal finances: borrowers may benefit from lower interest rates on variable loans and credit cards, while savers could face reduced returns on deposits. To prepare, individuals might consider moving savings to high-yield accounts, locking in current rates with longer-term CDs, delaying major purchases for potentially lower financing costs, and opting for HELOCs instead of fixed-rate home equity loans for better savings."
–Dan Kemp, global chief investment officer, Morningstar Investment Management Read the Full Article
INVESTOR TIPS
Diversification
Diversification is a strategy that can be neatly summed up as "Don't put all your eggs in one basket." The strategy involves spreading your money among various investments in the hope that if one loses money, the others will make up for those losses.
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This week's topic is: Do you think the Fed will implement an interest rate cut in September?
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