Hedge fund manager David Tepper of Appaloosa Management told CNBC that while valuations are elevated, investors are reluctant to fight the Fed’s easing path. “I don’t love the multiples, but how do I not own it?” he said, while warning that further cuts could push markets into “danger territory.”
Technology stocks powered much of Thursday’s momentum. CNBC reported that Intel surged 22.8% – its best performance in nearly four decades – after Nvidia announced a US$5-billion investment in the chipmaker to co-develop data centre and PC products. Nvidia shares climbed 3.5% on the news.
Canadian index strengthens
The S&P/TSX composite index gained more than 130 points, supported by strength in the technology sector. The Canadian Press reported that BMO Global Asset Management chief investment officer Sadiq Adatia said the market reflected “very strong bullish sentiment” tied to lower borrowing costs and robust earnings. “If you reduce rates, then that makes it a little bit more acceptable,” he said.
Both the Bank of Canada and the US Federal Reserve trimmed rates this week by a quarter point. The dual moves underscored concerns about labour market conditions in the US while offering relief to rate-sensitive sectors such as technology and small-cap equities.
Wells Fargo’s Investment Institute lifted its year-end forecast for the S&P 500 to a range of 6,600 to 6,800, up from 6,300 to 6,500, pointing to stronger earnings and economic fundamentals.