2026 Tech Valuations Supported by Accommodative Fed: BakerAvenue Analysis & Market Reaction

On January 2, 2026, during CNBC’s “Closing Bell” program, King Ip of BakerAvenue Wealth Management discussed chip stocks and top tech plays for 2026, positing that higher tech valuations are supported by a more accommodative Federal Reserve [1].

The Fed implemented 75 basis points in rate cuts over the final three meetings of 2025, lowering rates to 3.50%-3.75% [0]. Bloomberg’s 2026 outlook projects further cuts towards 3% [2], which reduces discount rates used to value future cash flows—a key factor for long-duration assets like technology stocks. This aligns with BakerAvenue’s argument that Fed accommodation justifies higher tech valuations.

Despite the accommodative thesis, the tech sector closed down 1.02% and the NASDAQ index dropped 1.05% [0]. Major tech stocks showed mixed performance: Apple (AAPL) -0.46%, NVIDIA (NVDA) -0.52%, but Applied Materials (AMAT) +0.67% [0]. Defensive sectors (Utilities +2.10%, Energy +2.01%) led gains, indicating a temporary rotation away from tech [0]. However, tech stocks (including “Magnificent Seven” names like NVDA) led early trading with gains over 1% [3], suggesting the sell-off was likely profit-taking after strong 2025 performance rather than a rejection of the Fed accommodation thesis.

1. Fed Policy as a Macro Driver
   : The link between Fed rate cuts and tech valuations highlights how monetary policy directly influences equity market dynamics, particularly for long-duration growth stocks.
2. Short-Term Rotation vs. Long-Term Thesis
   : The Jan 2 sector shift to defensives appears to be temporary profit-taking, not a fundamental rejection of the accommodative Fed narrative.
3. AI Market Continuation
   : The 2026 market remains AI-reliant, with ongoing investor focus on leading tech names despite short-term volatility [3].

• Valuation Risk
  : Forbes warned of “excessive valuation of AI boom stocks” in 2026, which could limit upside even with Fed accommodation [5].
• Policy Risk
  : If the Fed proves less accommodative than expected, tech valuations could face significant pressure.
• Volatility Risk
  : Reuters noted “bouts of volatility” due to macro, geopolitical, and policy uncertainty are likely in 2026 [4].

• Fed-Driven Valuation Support
  : Projected rate cuts towards 3% in 2026 could provide further support for tech valuations if economic data validates the accommodative stance.

• Core Thesis
  : Tech valuations are supported by a more accommodative Federal Reserve.
• Short-Term Market Action
  : Jan 2 tech sell-off (profit-taking) with defensive sector outperformance, but early tech momentum.
• Policy Context
  : 75 bps in 2025 Fed rate cuts, projected 2026 cuts to 3%.
• Critical Considerations
  : Decision-makers should await the full interview transcript, subsequent Fed statements, and tech earnings reports to validate the thesis and valuation support.

[0] Ginlix InfoFlow Analytical Database, internal, null, Market Data and Technical Analysis
[1] CNBC, https://www.youtube.com/watch?v=srJANeOEw4k, 2026-01-02, CNBC’s “Closing Bell” discussion with King Ip
[2] Bloomberg, https://www.bloomberg.com/graphics/2026-investment-outlooks/, null, Here’s (Almost) Everything Wall Street Expects in 2026
[3] CNBC, https://www.cnbc.com/2026/01/02/meet-the-2026-stock-market-its-the-same-ai-reliant-market-of-2025.html, null, Meet the 2026 stock market. It’s the same AI-reliant market of 2025
[4] Reuters, https://www.reuters.com/world/china/global-markets-global-markets-2026-01-02/, null, Stocks make upbeat start to 2026; precious metals extend sparkling rally
[5] Forbes, https://www.forbes.com/sites/petercohan/2026/01/02/2026-may-see-25-tariffs-28-growth-6-sp-500-rise-what-to-buy/, null, 2026 May See 25% Tariffs, 2.8% Growth, 6% S&P 500 Rise: What To Buy