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Yahoo
an hour ago
- Yahoo
Rate cuts could be weeks away. Here's how much history says stocks could rise as the Fed eases policy.
Investors expect the Fed to resume rate cuts next month. Historically, rate cuts have led to strong S&P 500 gains, but there have been exceptions. Here's what history says about how the market behaves once rate cuts start back up. After a weak few months of job growth, investors are banking on rate cuts from the Federal Reserve at their September meeting, and history shows cuts could be like rocket fuel for stocks in the months that follow. LPL Financial recently conducted an analysis of how stocks have performed from the first rate cut in a rate-reduction cycle until the eventual start of a new hiking cycle. On average, the S&P 500 has returned 30.3% during the nine periods when rates have been on the decline since 1974. The median return during those periods was 13.3%. Returns have been positive in six of those nine cycles. "Using history and prior Fed cutting cycles as a guide, some upside potential may remain for the second half of 2025," Jeff Buchbinder, LPL's chief equity strategist, said in the August 5 report. "But of course, past performance does not guarantee future results, and a new tariff regime not seen since the 1930s could slow earnings growth and fuel volatility." The largest market surges came in the lead up to the dot-com bubble, when the S&P 500 rose 161% from 1995 to 1999, the analysis showed. Other big gains included 62.8% from 1984 to 1993, and 38.2% from 2019 to 2021. But rate cuts aren't always a tailwind, especially during recessionary periods where the Fed acts too late. The market fell 23.5% during the 2007-2009 rate-cutting cycle, and from 2001-2004, the S&P 500 dropped 9.6%. This time around, Buchbinder said it's not a sure thing that rate cuts will be a boon for stocks, with ebullient investor sentiment having pushed up the market to new highs despite uncertainty remaining about the health of the economy. The market has also risen 12% already since the Fed's first cut of the cycle last September. "The delayed effects of trade policy are likely to weigh on the economy in the second half, leading to weaker labor market demand," Buchbinder wrote. "Recent market complacency toward trade policy and an economic narrative dependent upon strong economic data has caught our attention in recent weeks as a potential point of weakness." It's also not a guarantee the Fed continues to ease policy in the months ahead. Economists at Morgan Stanley and Bank of America both see the central bank keeping rates steady for the rest of 2025 despite CME FedWatch data showing investors pricing in 93.2% odds that the Fed cuts in next month. Given the apparent heightened levels of risk at the moment, Buchbinder said a conservative approach could be the best way forward in the near term. The firm likes growth stocks, large caps, and the financials and communication services sectors, he said. "Bottom line, investors may be well served by bracing for occasional bouts of volatility given how much optimism is currently reflected in equity prices," Buchbinder said. The firm's short-term asset allocation committee "advises against increasing portfolio risk beyond benchmark targets currently and continues to monitor tariff negotiations, economic data, earnings, the bond market, and various technical indicators to identify a potentially more attractive entry point to add equities on weakness," he added. Read the original article on Business Insider Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
CNBC
an hour ago
- CNBC
Trump's '100% chip tariffs' hit Japan's giants, but Samsung and TSMC rise on U.S. bets
Asia semiconductor-related stocks traded mixed Thursday after U.S. President Donald Trump announced he would impose a 100% tariff on chip imports, with an exemption for companies that are "building in the United States." Details on how much domestic manufacturing is required to qualify for the exemption remain unclear. Japanese semiconductor manufacturer Tokyo Electron fell over 5% before paring losses to trade 2.9% lower as of 11.20 a.m. Japan time (10.20 p.m. ET Wednesday), data from LSEG showed. Other Japanese chip stocks mirrored the fall. Renesas Electronics declined 4% at the open while Advantest slid 3.3%. However, South Korean chip majors Samsung and SK Hynix appeared to be exempted from the 100% tariffs, the country's top trade envoy Yeo Han-koo was reported as saying on the radio. Memory chipmaker SK Hynix rebounded after falling by more than 3% in initial trade. Shares of Samsung Electronics bucked the trend, climbing 2.47%. Apple announced Wednesday that it will use chips produced by Samsung Electronics at the latter's Texas facility for its devices, including iPhones. Taiwan Semiconductor Manufacturing Company — the world's biggest chip supplier — also started the trading session in the green, rising by over 4%. TSMC has announced significant investments in the U.S recently, including an initial $65 billion to build three plants in Arizona, and an additional $100 billion U.S. investment in March. "We're going to be putting a very large tariff on chips and semiconductors," Trump said in the Oval Office on Wednesday, adding that companies like Apple that are building or committed to building in the U.S. won't be charged. "So in other words, we'll be putting a tariff of approximately 100% on chips and semiconductors. But if you're building in the United States of America, there's no charge." Ernie Tedeschi, director of economics at the Budget Lab at Yale, noted that "the devil is in the details" as there is no clear framework yet on how exactly the chip tariffs are going to work. While Japanese semiconductor process equipment markets may wobble at the start given the headline shock of "100% tariffs," the move could be positive for the industry given the number of Japanese chipmaking equipment that are indispensable for most chipmakers looking to ramp up U.S. production, said Andrew Jackson, head of Japanese equity strategy at ORTUS Advisors.
Yahoo
an hour ago
- Yahoo
eBay Inc. (EBAY)'s Algorithims Are Working, Says Jim Cramer
We recently published . eBay Inc. (NASDAQ:EBAY) is one of the stocks Jim Cramer recently discussed. eBay Inc. (NASDAQ:EBAY) is an eCommerce retailer whose shares have gained 47% year-to-date. Most of these gains are due to an 18.3% jump in July after the firm's second-quarter earnings report. The results saw eBay Inc. (NASDAQ:EBAY) beat analyst second-quarter revenue and EPS estimates of $2.64 billion and $1.30 by posting $2.73 billion and $1.30, respectively. The firm's third quarter revenue guidance of $2.69 billion and $2.74 billion also overshot analyst estimates of $2.66 billion. Here's what Cramer believes about eBay Inc. (NASDAQ:EBAY)'s strong performance: 'Now one David, that I know that you will remember from the old days that really is putting on a good show, would be eBay. They've got their mojo back. It's up 15%, they had very good numbers, and I salute them. They hung in and now their model is working. They've got the algos working so to speak. And a lot of people upgraded it. That's to me, better focus, better focus.' Copyright: rawpixel / 123RF Stock Photo Earlier, Cramer discussed eBay Inc. (NASDAQ:EBAY)'s marketplace and shifting sentiment: 'There's no real theme to the other stocks on the list… eBay's a real shocker. It's come a long way to get back on this list. Now, I've watched this stock get carved up for ages, but now it looks like eBay has stopped being a whipping boy, and people are feeling comfortable buying merchandise second-hand. Has a partnership with Facebook's Marketplace, which has spurred real growth for the company. I like that, by the way, that marketplace section.' While we acknowledge the potential of EBAY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
