Here's Why Snap Is Moving

BY Benzinga | ECONOMIC | 09/26/23 03:21 PM EDT

Snap Inc (NYSE:SNAP) shares are trading lower by 3.5% to $8.30 Tuesday afternoon after HSBC initiated coverage on the stock with a Reduce rating and announced a $7.50 price target.

Stocks across sectors are also falling Tuesday amid overall market weakness with concerns about future rate hikes following last Wednesday's FOMC statement and lower-than-expected initial jobless claims data.

Why It Matters

Concerns about future rate hikes typically have a negative impact on stock prices. When the Federal Reserve signals that it may raise interest rates in the future, it makes borrowing more expensive for companies. This can lead to lower consumer spending and reduced corporate profitability.

Since Snap is a technology company, it might be particularly sensitive to changes in interest rates, as it relies on innovation and growth, which can be hindered by higher borrowing costs.

What's Going On?

The Federal Reserve last week maintained the federal funds rate within the 5.25% to 5.5% range at its September meeting in a unanimous move.

The September dot plot reveals the median preference for the fed funds rate at the close of 2023 remains unwavering at 5.6%. This figure mirrors projections made back in June, hinting at the possibility of one more rate hike during either of the last two meetings this year...

According to data from Benzinga Pro, SNAP has a 52-week high of $13.89 and a 52-week low of $7.33.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.