- Palantir stock benefits from neutral Fed meeting.
- Fed Chair Powell says economy unlikely to crash this year.
- Meta Platforms has lifted other tech stocks with its earnings beat.
- NASDAQ 100 rises 1.2% in Thursday premarket.
Palantir (PLTR) stock traded up 2.4% a half-hour into Thursday’s regular session. The stock initially broke above the $17.06 resistance point, reaching a high of $17.19, but later edged back to $16.84. The stock is being lifted on the coattails of the NASDAQ 100. The tech-heavy index rose 1.7% on Thursday following impressive earnings results from Meta Platforms (META) and a “neutral” press conference by Federal Reserve Chair Jerome Powell.
Before the bell on Thursday, US GDP data for the second quarter was released, showing a 2.4% annualized growth rate. This was much higher than the 1.5% rate that analysts had expected on average.
Palantir stock news: Was this the last rate hike?
Palantir, one the market’s most popular artificial intelligence (AI) stocks, is benefiting from two events aiding nearly all tech stocks. First, the Federal Reserve’s Federal Open Market Committee (FOMC) finished its two-day July meeting on Wednesday and voted to raise the fed funds rate range by 25 basis points as predicted.
Chair Powell followed up with his press conference afterwards, and most observers seemed to think he purposefully struck a “neutral” tone. This left many in the market thinking another rate hike at the next meeting in September was probably off the table. Others speculated that one more hike could come at the November FOMC meeting, but the market as a whole is hopeful that the steep hiking cycle that began in mid-2022 has ended.
“Chair Powell seemed intent on delivering a neutral meeting and for the most part succeeded,” wrote Veronica Clark, an economist for Citi, following the speech. “The well-expected 25bp rate hike was delivered. The September meeting was left ‘live’ for a rate hike, but Powell gave the impression the next hike would more likely come later this year, if at all, similar to market pricing.”
Indeed, the CME Group’s FedWatch Tool now has odds of only 20% that the Fed hikes rates in September.
Additionally, Powell said a recession now appears less likely than it did earlier in the year.
“My base case is that we will be able to achieve inflation moving back to our target without the kind of really significant downturn that results in high levels of job losses that we’ve seen in some past,” Powell said. “You’d stop raising [rates] long before you got to 2% inflation, and you’d start cutting before you got to 2% inflation too.”
This left some economists speculating that the central bank will begin cutting rates by March of next year. Lower interest rates are better for all businesses but especially for newer tech companies that normally focus on revenue growth before near-term profits.
Palantir stock news: Meta beats and raises
One of the larger holdings in the NASDAQ 100 index (3.5%), Meta Platforms stock soared more than 8% on Thursday following better-than-expected earnings results late Wednesday. GAAP earnings per share (EPS) reached $2.98, beating analyst consensus by about 2%. Revenue of $32 billion also beat consensus and rose 11% YoY.
Less than a year after CEO Mark Zuckerberg saw META’s share price drop below $90, the owner of Facebook and Instagram now trades above $329. Zuckerberg has mostly abandoned the company’s expensive metaverse strategy, saving the company billions of dollars in the process, and the company’s Reels product is now a $10 billion revenue driver just a year after being monetized.
“Consumer internet stocks rarely go on this kind of a run, but we think we are only at halftime and as noted above, the multiple barely assigns value to what META is doing,” wrote Barclays analyst Ross Sandler in a note to clients.
Barclays raised its price target from $320 to $410. This type of euphoria around one of the largest stocks in the market has spread to other tech stocks. The vast majority of the leading tech stocks, Palantir included, are thus benefiting on Thursday. Palantir’s stock price plunged in 2022 alongside Meta Platforms, but the META’s extreme turnaround is leading traders to mutter the axiom “Don’t bet against tech”.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022.
Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency.
When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
Palantir stock forecast
Palantir stock is climbing off its Wednesday retest of support at the 20-day Simple Moving Average (SMA). A close above the $17.06 support-turned-resistance level will lead bulls to take over price action once again.
That leaves the $20.55 former support level as the next likely point of resistance. The $17.06 level supported PLTR stock in May 2021, and the $20.55 level formed support in both March and July of that year.
The negative detail from the daily chart below is reflected by the Moving Average Convergence Divergence (MACD) indicator that has turned bearish. Further support exists at the 50-day SMA, which is merging at $15, and the June 23 bottom at $13.56.
PLTR daily chart
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