By Alex Financials

The stock market on October 24, 2024, saw a notable decline, with tech stocks bearing the brunt. As treasury yields rise, investors remain cautious about the pace of interest rate cuts by the Federal Reserve. The 10-year treasury yield climbed to its highest point since 2007, creating pressure across key sectors, particularly tech and discretionary stocks.

Tech Giants Under Pressure

Leading the downward trend were major technology companies, including Apple (AAPL) and Microsoft (MSFT). Apple’s stock fell after recent reports hinted at slowing iPhone demand in international markets, which added to investor worries about the company’s future growth potential. Microsoft also took a hit, following concerns that the company’s earnings growth in its cloud computing division might slow in the coming quarters, further dragging down the sector.

Tesla’s Earnings Disappoint Investors

Tesla (TSLA) experienced a significant drop after its Q3 earnings report missed Wall Street expectations. The electric vehicle manufacturer reported lower-than-anticipated deliveries and thinner margins, causing its stock to fall by over 5%. This earnings miss highlights the growing competition in the EV space and challenges in scaling production to meet the surge in demand for affordable EVs.

Fed’s Interest Rate Outlook

The Federal Reserve’s stance on interest rates continues to be a major market driver. Recent employment and inflation data led to speculation that the Fed might only implement smaller rate cuts—25 basis points rather than the anticipated 50 points. The reduced expectation for aggressive rate cuts has impacted the overall market sentiment, with a particular effect on rate-sensitive sectors like housing and tech. These developments are likely to keep the market volatile in the short term.

Global Concerns: China’s Market Rally

In contrast, Chinese stocks have shown a strong rebound following new policy stimulus from Beijing. The MSCI China Index rallied after months of underperformance, signaling optimism in the region. However, U.S.-based companies with exposure to China, like Apple (AAPL) and Nike (NKE), remain cautious as regulatory uncertainties still loom large.

Conclusion: Eyes on the Fed

With treasury yields on the rise and key earnings reports continuing to shape market sentiment, investors are closely watching the Federal Reserve’s next moves. Rising yields have especially impacted the tech-heavy Nasdaq, which fell more than 2% in recent sessions. How the market reacts to ongoing inflation data and the Fed’s approach to managing interest rates will be crucial in the weeks ahead.