In a recent discussion on CNBC's Last Call, anchor Brian Sullivan posed an intriguing question to Michael Farr of Farr, Miller & Washington: "What do you think is more important to the macro-market: NVIDIA (NASDAQ:NVDA) or the Federal Reserve?"
What Happened: The question, though asked with a touch of humor, sparked a discussion on the differing impacts of the tech giant and the central bank on the market. Farr, initially laughing at the question, quickly distinguished between the two. "Nvidia is a completely different story," he said.
Nvidia has been a standout performer, with its stock soaring 91.74% year-to-date, significantly outperforming major ETFs like the SPDR S&P 500 ETF Trust (NYSE:SPY), Invesco QQQ Trust (NASDAQ:QQQ), and the iShares Semiconductor ETF (NASDAQ:SOXX). This follows an impressive 240% surge in 2023.
Farr emphasized that although Nvidia symbolizes an impressive technological and investment narrative, the Federal Reserve occupies a pivotal position in the wider economic context.
Farr highlighted that the Fed controls the money, emphasizing its substantial impact on consumer behavior and economic stability. He noted that the current concern revolves around consumer spending, indicating that a lack of consumer expenditure poses a challenge for the Fed in effectively managing the economy.
Farr described the Fed's current stance as having "one foot on the gas, one foot on the brake," indicating a cautious and balanced approach in its monetary policy. He suggested that the Fed might remain silent for a while as it navigates this delicate balance.
Additionally, the initial results of the poll on X by CNBC indicated that 47.4% of respondents believe that Nvidia has more influence over the macro-market, while 52.6% of respondents believe that the Fed dominates the macro-market.
What's more important to the market?
— Last Call (@LastCallCNBC) May 22, 2024
Why It Matters: Nvidia's recent success has been remarkable. The company reported a beat-and-raise first quarter and announced a 150% dividend hike and a 10-for-1 stock split. This news, along with the company's overall performance, has led to a surge in Nvidia's stock.
Additionally, the Biden administration has expressed support for an independent Federal Reserve, amid alleged plans by former President Trump to control U.S. monetary policy. This has added an extra layer of significance to the ongoing discussions about the Federal Reserve's role in the economy.
Meanwhile, the Fed's recent minutes have raised the risk of 'higher-for-longer' interest rates, a factor that could potentially impact the market in the near future.
Image Via Pixabay
This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.