1 stock to consider as inflation data sends the S&P 500 soaring

As US markets opened on 15 January, the S&P 500 soared by 130 points on positive inflation data. Our writer considers what this means for tech stocks.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Inflation in newspapers

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It’s safe to say global markets haven’t had the best start to the year. The S&P 500 slipped 210 points in the weeks following Christmas, reaching a two-month low on 10 January. The FTSE 100, DAX and Nikkei suffered similar dips.

But news of rising US employment rates helped pause the S&P 500’s decline. Then, yesterday (15 January), consumer inflation data revealed a slowdown in price increases. After dashed hopes of interest rate cuts and the threat of trade tariffs, the market needed some good news.

Following the index’s 1.7% jump, the Dow Jones Industrial Average rose 1.6% and the Nasdaq Composite soared 2.3%.

Should you invest £1,000 in Scottish Mortgage right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage made the list?

See the 6 stocks

The US Consumer Price Index (CPI) now shows more promise of reaching the Fed’s 2% inflation target for December. The month-on-month slowdown in growth from 0.3% to 0.2% is the first sign of deceleration since July 2024. Odds of an interest rate cut in June are now considered more likely than not.

But don’t get too excited. 

US equity forecasts for 2025 are still underwhelming compared to last year. So what does this all mean for investors?

Choosing the right tech

An overarching theme I’m seeing more frequently is uncertainty regarding the major tech stocks. The so-called Magnificent 7 appear to have fallen out of favour. This may be partly due to Warren Buffet’s Berkshire Hathaway selling two-thirds of its Apple stock.

Some feel the move was a mistake and Apple remains the highest-weighted stock on the Nasdaq 100. But it’s hard to ignore one of the world’s most successful investors. I’m no die-hard fan but I can’t help but wonder: does he know something we don’t?

So to err on the side of caution, I’m steering clear of big tech for now. However, one major US tech stock I hold could buck the trend, and I think investors may want to consider it.

Created with Highcharts 11.4.3Axon Enterprise PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

On the sidelines

Axon Enterprise (NASDAQ: AXON) is a US tech company that manufactures safety devices such as TASERs, body-worn cameras, and digital evidence management software.

Its products are used by police and military across the US and have seen a surge in demand recently. Innovative developments like its Draft One AI-enhanced reporting software have helped boost sales.

In its third-quarter results for 2024, it reported earnings of $1.45 per share and revenue of $544.3m, a year-on-year increase of 42% and 32%, respectively.

The rapid growth meant it joined the Nasdaq 100 in December last year, moving to position 73 with a weighting of 0.28%.

Naturally, the soaring price has raised some concerns. With a price-to-earnings (P/E) ratio now well above 100, further price growth seems hard to imagine. A mild correction has already seen the price fall 10% in the past month. If the next earnings report falls below expectations, the price could take a big hit. It also faces the risk of budgetary cuts or regulatory changes.

Still, I think its long-term prospects are strong, driven by its dominance in a niche market. As competing semiconductor stocks try topple each other, Axon may sidestep the action and scoop up the spoils.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Scottish Mortgage right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Mark Hartley has positions in Axon Enterprise. The Motley Fool UK has recommended Apple and Axon Enterprise. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on US Stock

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »

Investing Articles

Tesla shares plummet 50% in 4 months! Is it one of the best stocks to buy now?

Weaker-than-expected vehicle deliveries have continued Tesla's freefall, but is this volatility turning it into one of the best stocks to…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Investing Articles

I just bought this legendary S&P 500 tech stock for my ISA, 27% off its highs

This S&P 500 stock has tanked over the last month and Edward Sheldon has snapped it up for his portfolio…

Read more »

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »