In this article, we will take a look at the 10 stocks plummeting after the Fed’s latest rate hike.
Elevated inflation has been denting the U.S. economy lately. Meanwhile, the U.S. central bank has repeatedly raised interest rates to combat inflation. However, those hikes have dragged down the stock market. Many fear that additional hikes might lead to a recession and stocks could crash.
Meanwhile, all three key U.S indices opened lower on Thursday morning, a day after the Fed lifted interest rates by 0.75 percentage points. Some of the most valuable U.S. stocks, including Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN) and Tesla, Inc. (NASDAQ:TSLA), dropped following the latest development.
Communication services stocks, including Meta Platforms, Inc. (NASDAQ:META) and Snap Inc. (NYSE:SNAP), also tumbled. Check out the complete article to see how the recent Fed’s decision has affected these stocks.
10. KB Home (NYSE:KBH)
Number of Hedge Fund Holders: 29
KB Home (NYSE:KBH) is a leading homebuilder in the U.S. The company’s shares slid over two percent on Wednesday, September 21, following the Fed’s latest rate hike. The increasing interest rates and home prices have significantly affected its sales growth this year.
The factors also mirrored in the company’s fiscal third-quarter results. KB Home posted the results after the closing bell yesterday. While it managed to surpass earnings expectations, its quarterly sales fell short of estimates.
KB Home generated revenue of $1.84 billion, while analysts were looking for $1.88 billion. Discussing the results, the company admitted that higher mortgage interest rates and elevated inflation are hurting its growth.
Meanwhile, research firm Barclays cut its price target for KB Home from $43 per share to $41 per share on Thursday, September 22, following its Q3 results. The research firm was primarily moved by increasing margin pressure and lower volumes.
9. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 44
Social media stocks, including Snap Inc., Meta Platforms, Inc. and Twitter, Inc. (NYSE:TWTR), also fell on Wednesday, September 21, after the recent rate hike from the Fed.
Snap Inc. shares have struggled to gain value this year due to the dwindling economy and record inflation. Its growth has been primarily hurt by cutbacks in ad spending from businesses. The stock has lost about 76 percent of its value on a year-to-date basis.
Meanwhile, Snap Inc. is trying to cut costs to steer through the current macro environment. The company recently decided to trim 20 percent of its employees as a part of those efforts.
Like Snap Inc., shares of Apple Inc., Amazon.com, Inc. and Tesla, Inc. also dropped following the Fed’s latest rate hike.
8. Accenture plc (NYSE:ACN)
Number of Hedge Fund Holders: 61
Shares of Accenture plc (NYSE:ACN) turned red on Wednesday, September 21, after the recent increase in interest rates from the U.S. central bank and a price-target cut from BMO Capital. The research firm lowered its price target for the professional services company from $337 per share to $315 per share.
BMO Capital analyst Keith Bachman expressed concerns over the company’s consulting bookings for fiscal 2023, given the softer economy and tougher comparisons. Bachman’s concerns appear to be true as Accenture plc (NYSE:ACN) just issued a lower-than-expected outlook for its fiscal 2023.
Accenture plc (NYSE:ACN) guided for earnings in the range of $11.09 – $11.41 for the full year, below analysts’ average estimate of $11.93 per share. The weak guidance also overshadowed its fiscal Q4 results.
The company posted its fiscal fourth-quarter results before the opening bell on Thursday, September 22. Accenture plc (NYSE:ACN) reported earnings of $2.60 per share, beating the consensus of $2.57 per share. The quarterly revenue of $15.42 billion also exceeded the expectations of $15.39 billion.
7. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 63
Cisco Systems, Inc. (NASDAQ:CSCO) is next on the list of 10 stocks that plummeted after the Fed’s latest rate hike. The stock fell to a nearly four-month low on Wednesday, September 21, 2022.
The IT and networking company has produced decent earnings and cash flows in recent years. However, its growth has decelerated this year. The growth issue was also highlighted by Barclays, which recently trimmed its price target for Cisco from $56 per share to $46 per share. The research firm believes Cisco Systems, Inc. is exposed to the macro environment.
Like Cisco Systems, Inc., shares of Apple Inc., Amazon.com, Inc. and Tesla, Inc. also moved down after the recent rate hike.
6. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 66
Shares of Broadcom Inc. (NASDAQ:AVGO) fell to a nearly two-month low on Wednesday, September 21, after the Federal Reserve increased interest rates by 0.75 percentage points.
The macroeconomic environment has affected nearly every sector and the semiconductor market is no exception. However, Broadcom Inc. has performed relatively well than many others in the semiconductor category.
While the semiconductor market seems to be cooling down, most analysts still have a “Buy” rating for Broadcom Inc.. In addition, analysts, on average, have a 12-month price target of $650 for the stock, compared to its current trading price of around $475.
5. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Shares of Tesla, Inc. dropped nearly three percent on Wednesday, September 21, after the recent hike from the U.S. central bank. Earlier this month, Piper Sandler analyst Alexander Potter had predicted that the company’s shares would likely move down in the coming weeks.
Back then, Potter said Tesla, Inc. shares could fall due to a spike in interest rates and weakness in China. The latest drop after the Fed’s recent rate hike suggests that the prediction has come true.
Nevertheless, most analysts, including Potter, are bullish on Tesla, Inc., given the increasing demand for EVs around the world. Potter has been keeping an “Overweight” rating and a price target of $360 for the stock.
4. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 106
Several U.S-listed Chinese stocks, including Alibaba Group Holding Limited (NYSE:BABA), also responded to the latest rate hike from the Fed. The stock fell approx. five percent on Wednesday, September 21, 2022.
Alibaba Group Holding Limited shares have been under pressure over the past year due to increasing regulatory scrutiny from both China and U.S. The stock is down about 30 percent on a year-to-date basis. Meanwhile, a slowdown in China’s economy has also negatively affected the company’s sales growth.
Separately, Alibaba Group Holding Limited appeared in the second-quarter 2022 investor letter of asset management firm Baron Funds. Here’s what the firm said:
“Alibaba Group Holding Limited (NYSE:BABA) is the largest retailer and e-commerce company in China. Alibaba operates shopping platforms Taobao and Tmall and owns 33% of Ant Group, which operates Alipay, China’s largest third party online payment provider. Shares of Alibaba rose during the quarter, driven by an increasing focus on improving capital allocation, an improving regulatory environment, and government stimulus targeting Chinese consumers. We retain conviction that Alibaba will benefit from rapid growth in cloud services, logistics, and retail.”
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Most analysts consider Apple Inc. a high-quality stock that could steer through any uncertain macro environment better than others. However, Apple shares also slipped over two percent on Wednesday, September 21, after the Fed’s latest rate hike.
However, the drop seems to be a part of a broader sell-off on Wall Street. Apple Inc. shares are expected to regain their lost value, given the strong fundamentals of the smartphone giant.
Meanwhile, Apple Inc. continues to enjoy the solid demand for its products despite macroeconomic challenges. Its recently launched iPhone 14 is also reportedly performing well.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 184
Meta Platforms, Inc. is next on the list of 5 stocks that plummeted after the Fed’s latest rate hike. The stock tumbled nearly three percent on Wednesday, September 21.
The social network giant has also been hit by the negative impact of elevated inflation and higher interest rates. Meta Platforms, Inc. shares have declined about 58 percent on a year-to-date basis.
Last week, Piper Sandler analyst Thomas Champion trimmed its price target for Meta Platforms, Inc. from $190 per share to $175 per share, citing intensifying competition and weak advertisers’ confidence.
Meanwhile, Meta Platforms, Inc. is trying to reduce costs to make up for the slow growth. The company is reportedly planning to lay off 10 percent of its employees as a part of the cost-cutting measures.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Amazon.com, Inc. reacted very much like every other notable U.S. stock on Wednesday, September 21. The stock fell at 2:00 PM ET in the previous trading session after the Fed’s latest rate hike.
The stock extended its downward movement this morning, losing nearly two percent. Overall, Amazon.com, Inc. shares have lost about 30 percent of their value so far this year.
Much of that drop has been attributed to the ongoing inflationary pressure that has been weighing on the company’s margins. Nevertheless, analysts expect Amazon.com, Inc. to make a rebound once the inflation and interest rates start decreasing.
You can also take a peek at Best Robotics Stocks To Invest In and 10 Best Cyclical Stocks for Inflation.
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