Dec 17th, 2023 – In a resolute move, the Federal Reserve has maintained its interest rates for the third consecutive meeting, with Chairman Jerome Powell indicating that the benchmark rate is likely peaking for this tightening cycle. Presently, the rates stand at their highest since 2001, fluctuating between 5.25% and 5.50%. Powell anticipates a shift in 2024, hinting at three potential rate cuts, with more expected in 2025 and 2026. This announcement was well-taken by the US stock indices, marking their seventh consecutive week of gains. The S&P 500 closed at its highest since January 2022, Dow Jones has reached for the first time the milestone of 37000, and NASDAQ was nearly 8% away from its all-time high. After the FED’s meeting, interest rate sensitive indices outperformed the S&P 500. The Russell 2000, representing small-cap stocks, rose over 11% this month, and the S&P 500 real-estate sector was up about 12% this month. Market sentiment reflects optimism for a soft economic landing, with no imminent recession on the horizon. Despite Powell acknowledging the possibility of a recession in 2024, the prevailing belief in the market is steering toward a positive trajectory.
Chip-maker company Broadcom has registered a great performance this week, with a 15% increase in its shares. The rally was prompted by Bank of America analysts upping their target price of the stock from $1200 to $1250. Following a virtual meeting with Broadcom’s CEO, CFO, and head of investor relations, Bofa analysts foresee substantial benefits from Broadcom’s acquisition of cloud computing company VMWare for $61 billion, predicting enhanced cost synergies and increased profit margins. Citi analyst Christopher Danely echoed this sentiment, raising Broadcom’s price target to $1,100 and assigning a buy rating to the company. The consensus among analysts underscores a bullish outlook for Broadcom’s future performance.
Author: Filippo Ferrero