Are rate cuts priced in?
After much speculation, the Federal Reserve finally seems committed to cutting interest rates, with traders pegging the probability of a rate cut in September at 100%. In the days following the news, big tech sold off while the Russell 2000 small caps outperformed. The Russell 2000 looks like it's breaking out of the ~190-210 range. The Nasdaq ETF QQQ had a bearish breakdown from a rising wedge. The question is: is this the start of a new trend or a short lived head fake? I think it's a new trend. Mega cap tech has lead the market for much of recent memory. The cloud, AI, subscriptions, valuable data and the essential nature of their devices makes big tech's place in society seem bulletproof. On top of that, huge share buybacks and dividends provide a high floor to their share price. A dot com crash for big tech scenario seems unlikely - the business models are too proven. And looking at the bigger picture - inflation cooling and the federal reserve pivoting toward rate c...