Investors eagerly anticipate a potential interest rate cut, but the market may not react as expected. Core inflation increased by 0.3% in July, the largest jump in six months. Jim Bianco of Bianco Research warns of rising inflation due to Trump’s tariffs, estimating an extra $250 to $300 billion in tariffs to be collected in the next year.

Bianco expects clarity from Fed Chair Jerome Powell at the Jackson Hole Economic Symposium. A September rate cut may not be on the horizon, potentially leading to backlash, including renewed political pressure from President Trump. The decision could heavily impact megacap tech stocks, with the top 10% of US companies representing 76% of total market capitalization.

The market’s high concentration leaves it vulnerable to interest rate changes. If yields rise, money may shift from stocks to bonds, potentially triggering profit-taking in Big Tech stocks if 10-year Treasury yields hit 5%. Bianco advises caution when investing in popular market names, as volatility can lead to significant gains or losses.

Read more at Yahoo Finance: Why a Fed rate cut could lead to bad news for Big Tech stocks