SUPERNEWS

Macro

Fed Rate Decision Could Swing Tesla, Carnival Stocks

Market on edge as Fed decision nears, with stocks like Tesla and Carnival poised for significant impact.

By Barry Stearns

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5/1, 12:16 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Advanced Micro Devices, Inc.
Carnival Corporation
CVS Health Corporation
DuPont de Nemours, Inc.
Goldman Sachs Group, Inc.
Tesla, Inc.
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Key Takeaway

  • Stocks like Tesla and Carnival could face further declines if the Fed's decision leads to higher Treasury yields, impacting sensitive sectors.
  • Super Micro Computer, with a high correlation to Treasury yield movements, risks losing its 148% gain in 2024 amid rate concerns.
  • The Fed's upcoming interest rate decision is crucial for stocks highly sensitive to rate changes, potentially dictating market direction.

Fed Decision Looms Over Markets

As the Federal Reserve gears up for its highly anticipated interest rate decision, the financial markets are on edge, with significant movements observed across various sectors. The 10-year Treasury yield, a critical benchmark, has seen fluctuations, nearing 4.75% in April from a start of the year below 4%, indicating heightened market sensitivity to the Fed's upcoming policy announcement. Jerome Powell, the Fed Chair, has voiced concerns over the less-than-desirable progress on inflation control, adding to the market's anxieties. This backdrop sets a tense stage for the Fed's decision, which could pivot the market direction for the remainder of the year.

Stocks Under the Microscope

Goldman Sachs has identified a portfolio of stocks with high sensitivity to changes in the 10-year Treasury yield, suggesting that these stocks could face the most significant impacts based on the Fed's rate decision. Notable mentions include Tesla, with its shares already down over 27% in 2024, and Carnival, which has seen a nearly 23% pullback. These movements underscore the broader market apprehension, with sectors like technology and discretionary spending bracing for the potential fallout from higher interest rates.

Sector-Specific Reactions Pre-Fed Announcement

In anticipation of the Fed's decision, the market has exhibited mixed reactions across different sectors. Bio-Techne and DuPont de Nemours have seen substantial gains, while CVS Health and Leggett & Platt have faced steep declines, reflecting the diverse impacts of market speculation and company-specific news. The technology sector, in particular, has shown vulnerability, with AMD's shares dropping after a forecast that met, but did not exceed, market expectations. This sector-wide variability highlights the cautious stance investors are taking as they await further clarity from the Fed.