Palantir Stock Forecast: PLTR rises on optimism of rate-hikes ending


  • 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 trading.

Palantir (PLTR) stock is trading marginally higher during Thursday's US session. The stock initially broke above the $17.06 resistance point, reaching a high of $17.19, but later pared its gains. The stock was 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”.

 

Nasdaq FAQs

What is the Nasdaq?

The Nasdaq is a stock exchange based in the US that started out life as an electronic stock quotation machine. At first, the Nasdaq only provided quotations for over-the-counter (OTC) stocks but later it became an exchange too. By 1991, the Nasdaq had grown to account for 46% of the entire US securities’ market. In 1998, it became the first stock exchange in the US to provide online trading. The Nasdaq also produces several indices, the most comprehensive of which is the Nasdaq Composite representing all 2,500-plus stocks on the Nasdaq, and the Nasdaq 100.

What is the Nasdaq 100?

The Nasdaq 100 is a large-cap index made up of 100 non-financial companies from the Nasdaq stock exchange. Although it only includes a fraction of the thousands of stocks in the Nasdaq, it accounts for over 90% of the movement. The influence of each company on the index is market-cap weighted. The Nasdaq 100 includes companies with a significant focus on technology although it also encompasses companies from other industries and from outside the US. The average annual return of the Nasdaq 100 has been 17.23% since 1986.

How can I trade the Nasdaq 100?

There are a number of ways to trade the Nasdaq 100. Most retail brokers and spread betting platforms offer bets using Contracts for Difference (CFD). For longer-term investors, Exchange-Traded Funds (ETFs) trade like shares that mimic the movement of the index without the investor needing to buy all 100 constituent companies. An example ETF is the Invesco QQQ Trust (QQQ). Nasdaq 100 futures contracts allow traders to speculate on the future direction of the index. Options provide the right, but not the obligation, to buy or sell the Nasdaq 100 at a specific price (strike price) in the future.

What Factors Drive the Nasdaq 100

Many different factors drive the Nasdaq 100 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the Nasdaq 100 as it affects the cost of credit, on which many corporations are heavily reliant. As such the level of inflation can be a major driver too as well as other metrics which impact on the decisions of the Fed.

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