Tech stocks fell for the second session
After a Fed-induced five-day winning streak for the tech-heavy Nasdaq Composite Index, the index fell for the second straight session on Wednesday, June 12, falling 0.38% to 7,792. AMD (AMD) and Snap (SNAP) have been two of the best-performing stocks during this period. AMD is up 20% since May, and Snap is up 23.4% in the same period.
Tech stocks rose sharply in June after the Fed hinted at a rate cut. An accommodative monetary policy has gone down well with markets in the post-recession era. Easy money has meant steep stock gains in the past ten years.
The latest signs of a slowing economy
While the US economy has generally held up well despite expectations of a recession earlier this year, recent readings have not been great. Most recently, jobs figures disappointed.
The US economy added only 75,000 jobs in May compared to market estimates of 185,000 and down from an addition of 224,000 jobs in April. However, we need more data to conclude that the labor market is deteriorating.
Meanwhile, inflation pressure remained subdued last month, which further raised hope that the Fed will cut rates. A weakening economy also warrants a cut in rates. The markets are, for the time being at least, overlooking the trade tensions between the US and China, which remains a big threat to the economy.