Pick up up
If inflation remains persistent, the Federal Reserve may have less room to cut interest rates and could consider tightening policy if the economic data warrants it. However, a December rate increase is not guaranteed.
Higher interest rates can pressure growth stocks because their valuations depend heavily on future earnings. When investors can earn more from lower-risk assets, they may demand a greater return before paying premium prices for technology companies.
Potential beneficiaries: Cash-rich companies with strong free cash flow and reasonable valuations.
Potentially vulnerable: Expensive growth stocks whose profits remain years away.
My approach: Avoid chasing a rally purely because of AI excitement. Consider dollar-cost averaging into diversified ETFs such as QQQM rather than investing all my capital at once.
The important distinction is that a rate increase does not automatically