3 Tech Stocks to Watch for QE3 (Update)
The Federal Reserve did not announce another round of easing at its latest policy meeting, but there were slight changes to the statement which signal the Fed may indeed act. "The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability," the FOMC wrote in a release.
Although the July jobs report showed 163,000 jobs were added during the month, the unemployment rate ticked up to 8.3%, which may be a signal for the Fed to act.
Morgan Stanley economist Vincent Reinhart had some thoughts on the recent Fed decision. He tweeted, "The news since June meeting was not enough to trigger action, implying a high hurdle for action. Language change matters." He also noted, "Fed paving the way for new rate guidance. Pay attention to Chairman Bernanke's Jackson Hole speech."
The U.S. dollar has continued to strengthen, particularly against the Euro, as U.S. economic data has remained weak, but the crisis in the Eurozone gets drastically worse. Technology companies such as Apple, IBM and VMware, which derive a significant portion of their revenue from overseas, may benefit from an additional round of easing because of their heavy exposure to international markets. Additionally, converting the companies' overseas earnings back into U.S. dollars would help earnings.