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Fed's interest rate decision boosts tech ETFs, hints at future changes

EditorHari G
Published 11/03/2023, 11:28 AM
Updated 11/03/2023, 11:28 AM
© Pavlo Gonchar / SOPA Images/Sipa via Reuters Connect

The Federal Reserve's decision to hold its benchmark interest rate steady between 5.25% and 5.50% has had a significant impact on various tech ETFs, as analyzed by today. The central bank's decision led to a decline in the 10-year Treasury yield to 4.77%, which has favored the high-growth technology sector.

Following the announcement, the Technology Select Sector SPDR Fund XLK, VanEck Semiconductor ETF SMH, Fidelity MSCI Information Technology Index ETF FTEC, iShares Expanded Tech-Software Sector ETF IGV, and iShares Global Tech ETF IXN, all experienced substantial gains.

The Fed also hinted at potential future changes to meet its 2% inflation target. This news comes amid a backdrop of high inflation, which remains a key concern for the Fed. Despite moderated job gains, the robust job market maintains a low unemployment rate.

Furthermore, the central bank upgraded its Q3 2023 economic assessment from "solid" to "strong." This reflects a surge in economic activity and a 4.9% annualized growth rate driven primarily by consumer spending.

Investors now anticipate a 67.3% likelihood of rates staying steady through January according to the CME FedWatch Tool. This prediction follows the recent Fed announcement and indicates a potential stable period for tech ETFs in the coming months.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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