Fed rate hike narrows stock-buying universe as 10-year yield threatens AI trade

  • Jim Cramer said the Federal Reserve's rate hike is narrowing the stock-buying universe and means investors are now fighting the Fed.
  • Ruchir Sharma said a sustained 10-year Treasury yield above 5% could pressure stocks and AI companies; the yield fell five basis points to 4.94% Thursday after reaching a 19-year high.
  • The Fed raised its federal funds target range to 3.75% to 4%, while inflation remained above its 2% target and policymakers indicated another hike could come later this year.

CNBC's Jim Cramer said the range of stocks investors should consider buying is narrowing after the Federal Reserve raised its federal funds rate by 25 basis points to 3.75% to 4%, saying buyers are now officially fighting the Fed. Breakout Capital founder and chief investment officer Ruchir Sharma separately warned that a sustained 10-year Treasury yield above 5% could weigh on stocks, particularly artificial intelligence companies, by increasing the discount rate applied to future profits. The benchmark yield touched 5%, reached a 19-year high and later fell five basis points to 4.94% on Thursday. Sharma said historical data shows the stock-bond relationship becomes positive above 5% and equity prices decline above 5.25%, while policymakers indicated another rate increase could come later this year.

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