Gaotu Techedu Inc. (GOTU) stock fell sharply in pre-market trading on Thursday, plummeting 5.17% amid broader concerns over the sustainability of the recent tech rally without solid earnings growth backing and caution from the Federal Reserve regarding future interest rate cuts.
The decline in GOTU's shares comes as Chinese tech companies listed in the U.S. faced selling pressure on worries that their stock prices may have run ahead of their actual earnings performance. Investors are increasingly questioning whether the recent bullish sentiment surrounding the sector can be sustained in the absence of robust financial results.
Additionally, minutes from the Federal Reserve's January policy meeting released on Wednesday suggested that policymakers were prepared to pause further rate cuts, citing uncertainties surrounding the economic outlook and inflation projections. This cautious stance from the Fed added to the overall bearish sentiment, weighing on interest-rate sensitive sectors like technology.
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