This is one of the biggest weeks of the year for technology company earnings, to the point that the Federal Reserve’s interest-rate decision could be something of an afterthought, according to a report by Bloomberg. 

Even though the higher rates have been the primary problem for tech stocks in 2022, investors say the policy path is now priced in, especially since consumer inflation expectations are decreasing, saying that the Fed may be able to be less devious.

Natixis Investment Manager’s lead portfolio strategist Jack Janasiewicz says, “The market is comfortable with the path of hikes, and if rates are stabilizing here, that should be a good backdrop for growth stocks to come back again,” Because the Fed is a known quantity, Janasiewicz added, earnings will be critical for the market. 

The Nasdaq 100 has risen 8.6 per cent from its June low, and recently broke above its 50-day moving average for the first time since April, a positive signal for near-term momentum. It is on track for its biggest one-month percentage gain since October but remains down about 26 per cent this year.  

Chief executive officer of enterprise software company Appian Matt Calkins is so concerned about inflation that he wants the Fed to be extremely aggressive, raising rates by 100 or 125 basis points. The yield on the 10-year Treasury is below 2.8 per cent, down from a June peak of almost 3.5 per cent. 

“We need to either get inflation back in the box, down to 2 per cent again, or we will need to end up with some kind of long-term acceptance of higher inflation,” he said in a phone interview. A recession is inevitable, he said, and “the main issue is whether we will still have inflation on the other end.”

The Fed’s meeting came in a busy week for earnings. Apple, Amazon.com, and Facebook parent Meta Platforms are all scheduled to report this week. Some investors are also concerned that earnings estimates and stock prices don’t yet reflect the full effect of a slowing economy triggered by higher rates. The Nasdaq 100 is trading at 20.4 times forward earnings, slightly above its 10-year average. However, if consensus estimates continue moving lower, as they are expected to, that multiple might be deceptively low.

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