CNBC's Jim Cramer highlighted some stocks that benefited from Wednesday's dovish Federal Reserve meeting, And apart from Tesla, no one was among the “Magnificent Seven” that managed to counteract the market's downward trends.
“And it left a bunch of new winners in its path, winners who were complete losers until yesterday at 2 p.m. when the Fed released its statement,” Cramer said of the Fed's actions during Thursday's show. “These stocks used to be roadkill because they need lower interest rates to thrive.”
Cramer said companies like construction equipment maker Caterpillar and automaker Ford are in a great position to benefit from the end of interest rate hikes the Fed's hints of rate cuts in 2024.
Wall Street has criticized Caterpillar for having excess reserves during the recent high interest rate economy. However, with lower interest rates expected in 2024, Cramer said those same reserves will ensure Caterpillar is equipped to handle the increased construction demand that typically accompanies lower interest rates.
Ford stock has taken a hit due to labor costs, electric vehicle competition and high auto loan rates, but the company's 5% dividend and the Fed's looser monetary policy make it an attractive stock.
The Fed's reassuring monetary policy message on Wednesday means that a wider range of companies may fall into crisis, leading to a shift among investors in how they put their money in the stock market.
“Of course, companies won't be affected if interest rates go down, but their stocks will be affected because there are so many other parts of the economy that are better off with lower interest rates,” Cramer said. “The money will flow from the Magnificent Seven, as it started yesterday and today, into these other stocks.”
Amazon, Microsoft, Meta, Google, Apple and Nvidia all had even days. Tesla was the only outlier within the Magnificent Seven, gaining almost 5%.
“On the last conference call, Elon Musk complained that higher interest rates were causing a slowdown in car purchases,” Cramer said. “But yesterday, when Jay Powell effectively ended his historic tightening cycle, he changed everything for the stock market. Now interest rates are falling again, Tesla’s biggest worry, well I have to tell you, it’s gone.”