Technology Select Sector exchange-traded fund (ETF), managed by State Street Global Advisors, informally Spyders (SPDR), which is a trademark of Standard and Poor's Financial Services LLC, looks to be the current golden opportunity between mid-term investment strategies and short-term speculative tools. The fund's top 10 holdings were Microsoft (21.28% of assets), NVIDIA (20.16% of assets), Apple (5.01%), Broadcom (4.36%), Adobe (2.70%), Salesforce (2.57%), AMD (2.52%), Oracle (2.36%), Accenture PLC Class A (2.25%) and Cisco Systems (2.14%), totalling more than 65% of the fund's portfolio, according to the latest composition date revealed. For those who don't want to thoroughly weigh better or supposedly more balanced proportions and to exercise in picking up all those flagship issuers one by one, this looks as a nearly perfect decision when the new wave of AI-related, cloud and big data rally is steaming up.
The U.S. rate cut bets are made, following the recent set of US jobs and inflation data. The investing crowd became convinced that the central bankers will cut borrowing costs next Wednesday, September 18, for the first time after the corona crisis. A 0.4% monthly contribution into an annual surge from 3.6% to 3.8% in average hourly earnings leaves no room for doubt that price pressure is still here, while 142,000 of new jobs are not appealing to the Federal Reserve for immediate rescue. The combination of further money depreciation worries, with the consensus understanding that the Fed would rather support a small 25-basis point move down, has turned into the most favourable environment for accelerating U.S. Dollars' conversion into equities and gold.
As gold prices hit records above $2600 per ounce and the U.S. Dollar index is turning south again, any wisely collected set of tech equities has a potential of transforming into better or new gold, as gold does not bring direct profit in contrast to business, especially since most of the listed companies still trade with a lesser or greater discounts, compared to their all-time highs. At least, some chosen stocks have a clear room to the upside for that reason. Therefore, potential risk/profit ratios are seemingly better for popular IT stocks, compared to gold or currency pairs' trading.
Only two days ago, 69% to 77% of futures traders believed in a 0.25% rate cut. After the reportedly influential former New York Fed president Bill Dudley later said "there's a strong case for 50 [basis points]", the Chicago Mercantile Exchange (CME) futures are seen pricing in a 57% chance for a 0.25% cut and as much as a 43% chance for a 0.50% start for a monetary easing cycle. However, the Fed has no serious reason for nurturing panic sentiment now, in our opinion, to keep its stronger dose of medications in pocket until early November. Anyway, only 26.4% of today believers in just 0.25% plus another 0.25% rate cut on September 18 and November 7 are in the poor minority right now, according to official FedWatch tool on CME, when nearly 50% of futures traders are betting money for a 0.75% rate cut on the sum of two Federal Reserve's meetings. About 23% are even betting on the two large 0.5% rate cuts to lead the borrowing costs 1% lower after elections. Anyway, the cut of cards on the rate cut table feeds the bullish party on Wall Street.
