The Nasdaq, which is extremely sensitive to the Fed's policy outlook, experienced its first weekly fall in 2023, arousing some traders' concerns that expectations for the Fed's tightening to halt in the coming months are premature.
Following a good labour market report and Chinese loan figures for January, the chance that the current tightening cycle will stop at the June meeting has increased. This implies that the Fed's final rate might be in the 5.25-5.50% range.
A reduction in Russian oil output might be another geopolitical risk that drives up energy costs in the coming months. The Fed will not be blamed if they push the economy into a recession in 2023, but many investors appear to be unaware that if the Fed underestimates the inflation forecast one more time, its credibility will be completely lost.
Alphabet: More potential to come
Since the introduction of the AI bot ChatGPT, which is supported by Microsoft, Alphabet has been competing with the latter for market supremacy in the artificial intelligence sector.
It has stimulated investor interest in AI stocks and inspired Alphabet to establish its own competitor ChatGPT, and we don't believe Microsoft will "derail" Alphabet.
Alphabet has a very solid artificial intelligence product and a decent game plan, and the tech behemoth has "embraced investment" and will adapt to the future.
We believe they are going to be a large, sustained player in search of a product that competes very aggressively in the market, and investors are purchasing the company at a "fantastic bargain" presently.
Tesla: Near-term momentum running out of steam
Despite CEO Elon Musk's intentions to announce his "Master Plan 3" at an investor day on March 1, Tesla's share price growth is expected to stagnate.
This industry is not as robust as it could be, and it will face stiff competition from well-established firms. It is difficult to construct automobiles. Many traders are concerned about the industry's long-term fundamentals and their ability to compete.
Alibaba and Baidu: China's ChatGPT frenzy is still ongoing
With growing interest surrounding OpenAI’s ChatGPT, stocks related to artificial intelligence listed in mainland China have soared this year, with one company having tripled in valuation since January.
Alibaba is working on a rival product like ChatGPT, while Baidu, announced earlier this week it will launch “Ernie bot,” its artificial intelligence chatbot.
Fullerton Markets Research Team
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