Impact of Fed's Rate Decision on Magnificent 7 Stocks: Insights from Benzinga Poll

In January 2025, the Federal Reserve decided to maintain the federal funds rate between 4.25% and 4.5%. This decision came after a series of three consecutive rate cuts that took place in 2024, totaling 100 basis points.

In light of this development, a recent Benzinga reader poll was conducted to understand which of the Magnificent 7 stocks might be most adversely affected by the Fed's decision to keep rates unchanged.

Poll Results and Insights

The results of the poll highlighted varied predictions regarding the impact on the Magnificent 7 stocks. Approximately 39% of participants believed that Tesla Inc (TSLA) would face the most significant challenges, citing concerns related to borrowing costs for more expensive products.

NVIDIA Corporation (NVDA) was identified by 30% of the respondents as the second most likely to be impacted negatively, due to its role as a provider of products and services that benefit from broader economic growth.

Other stocks, including Amazon.com Inc (AMZN), Microsoft Corporation (MSFT), Apple Inc (AAPL), and Meta Platforms (META), received similar levels of concern regarding their stability under the current interest rate climate, with each garnering around 9% to 8% of the votes.

Interestingly, Alphabet Inc (GOOG, GOOGL) received no votes, suggesting that respondents believe it may weather the rates' influence better than its peers.

Economic Context and Predictions

The Fed's decision to keep rates steady is significant given the prevailing economic conditions. Economists now predict that the first potential rate cut may not occur until June 2025, with varying probabilities assigned to different months. As of now, there is a 30% likelihood of a rate cut in March, a 45% chance in June, and a 28% chance in September.

The Fed's statement emphasized that “economic activity has continued to expand at a solid pace” and that inflation is trending closer to its 2% target, although it remains somewhat elevated. These comments are more cautious compared to previous discussions held in December.

Former President Donald Trump expressed criticism of the Fed's regulations post-decision, advocating for more aggressive rate cuts to stimulate lending.

The next FOMC meeting is scheduled for March 18-19, which may lead to further updates regarding interest rates.

Conclusion

The responses from the Benzinga poll reflect a range of opinions on how these high-profile companies may navigate the economic landscape shaped by the Federal Reserve’s recent decisions. The potential implications for stocks such as Tesla and NVIDIA highlight the varied exposure to changing economic conditions among the Magnificent 7.

Fed, Stocks, Poll