On Thursday of last week, Federal Reserve Chairman Jerome Powell cut the Fed Funds Rate by 50 basis points, leading to a broad-based rally in the US equity markets with the NASDAQ closing up over 3% and the Dow Jones Industrial Average hitting an all-time high. Many believe Chairman Powell is trying to orchestrate a soft landing of the US economy. This rate cut, along with future cuts expected to be up to 150 basis points in the near future, should create relief for many Americans by lowering the cost of business loans, auto loans, and the interest that folks pay on their credit card balances. Mortgage rates already have been falling for months in anticipation.
Sentiment truly matters, and now that rates are moving down, this alone could be enough to make more households and businesses feel good about spending again, buttressing the economy for the foreseeable future.
What will rate cuts mean to financial markets?
The drop in interest rates should spur M&A and investing activity lead by big tech in the Artificial Intelligence (AI) space. In the AI-verse we are seeing a theme and a rotation into large data centers and the companies that build out their electrification systems such as Vertiv Holdings (VRT), and nuclear energy companies that will need to supply the massive data centers that will harness AI production. Companies such as Vistra Corp (VST) and Constellation Energy (CEG) should stand to benefit immensely from this surge in infrastructure investment. Just this past Friday (9/20/24), Microsoft announced they will be partnering with Constellation Energy to re-open the dormant nuclear facility at Three Mile Island to power their data centers. Constellation was up over 22% on Friday on this development.
It seems big tech will continue to invest in a variety of AI related companies with many of the leading AI unicorns already taking in significant dollars. Open AI, already owned 49% by Microsoft, announced that both Apple and Nvidia will invest $1 billion in their most recent funding round.
Couple this with the $4 billion dollars Amazon recently invested along with $2 billion from Google in Anthropic, and it seems like the AI companies both public and private are the place to be.
In addition, many highly anticipated Unicorn IPOs in the space such as Cerebras and Groq will continue to generate interest, investments and profits in the months and years to come.
Dominari Securities via Dominari Master SPV Series offers accredited investor the access to pre IPO unicons via our Dominari Master SPV Series. If you would like more information, please email us at info@dominarisecurities.com.
Kyle M. Wool
Disclosures
Kyle Wool owns: AAPL, MSFT, NVDA,VRT, VST and CEG in the public markets and Cerebras and Groq via Dominari Master SPV’s in the private market.
Dominari Holdings owns: Cerebras and Groq via Dominari Master SPV’s in the private market.
For additional information about Dominari Holdings Inc., please visit: https://www.dominariholdings.com/.
Dominari Securities LLC's Mission Statement
Dominari, a principal subsidiary of the Company, is a dynamic, forward-thinking financial services company that seeks to create wealth for all stakeholders by capitalizing on emerging trends in the financial services sector and identifying early-stage future opportunities that are expected to generate a high rate of return for investors.
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