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<ul class="summary-list"><li>Nuclear-power stocks fell after regulators voted against a deal between Amazon and Talen Energy.</li><li>The deal would permit a Talen nuclear plant to provide an Amazon data center with extra power.</li></ul>Nuclear-power stocks slumped on Monday after US regulators barred a plant from supplying extra power to an <a target="_blank" href="https://markets.businessinsider.com/stocks/amzn-stock">Amazon</a> data center.The Federal Energy Regulatory Commission rejected the deal between Amazon and <a target="_blank" href="https://markets.businessinsider.com/stocks/tln-stock">Talen Energy</a> late last week. According to FERC Commissioner Mark Christie, approving the proposal would <a target="_blank" href="https://www.ferc.gov/news-events/news/commissioner-christies-concurrence-pjms-susquehanna-co-location-proposal-er24-2172">spark consequences for grid reliability and consumer costs</a>.Talen dropped as much as 8.6% on Monday, unleashing a broader downturn in the nuclear power sector. <a target="_blank" href="https://markets.businessinsider.com/stocks/vst-stock">Vistra</a> slid 6.7% at intraday lows, while <a target="_blank" href="https://markets.businessinsider.com/stocks/ceg-stock">Constellation Energy</a> tanked 13%.These firms have gained sharply as AI data centers have driven US <a target="_blank" href="https://markets.businessinsider.com/news/commodities/ai-power-grid-demand-utility-bill-outlook-electricity-ev-2024-7">power demand to new heights</a>. In recent months, tech companies have come to embrace nuclear power to run these centers, fueling underlying equities.Both Vistra and Constellation are among the top S&amp;P 500 performers this year. In a similar fashion to Talen, Constellation reached a 20-year deal with <a target="_blank" href="https://markets.businessinsider.com/stocks/msft-stock">Microsoft</a> to power its data center inBut the FERC's decision sets a precedent that could challenge nuclear data center deals."FERC's decision will have a chilling effect on economic development in states such as Pennsylvania, Ohio, and New Jersey," Talen <a target="_blank" href="https://ir.talenenergy.com/news-releases/news-release-details/talen-energy-statement-ferc-order-rejecting-susquehanna-isa">said in a statement</a>.According to <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-11-04/us-power-stocks-slump-after-regulator-rejects-nuclear-agreement">Bloomberg</a>, the firm was already paid $650 million in March by Amazon Web Services for a data center campus next to the Pennsylvania plant at issue. AWS also signed a long-term deal to purchase power from the plant.Other nuclear equities also suffered on Monday, with the Sam Altman-backed firm <a target="_blank" href="https://markets.businessinsider.com/stocks/oklo-stock">Oklo</a> and <a target="_blank" href="https://markets.businessinsider.com/stocks/nne-stock">Nano Nuclear Energy</a> both falling by double-digits.

Nuclear-power stocks slide after regulator rejects plan to power Amazon data center

<ul class="summary-list"><li>Investors are too optimistic about the near-term prospects of AI, Vanguard said.</li><li>Firms would need to growth profit by 40% annually for the next three years to match valuations, the firm said.</li></ul>With tech companies still <a target="_blank" href="https://www.businessinsider.com/openai-gpt5-gpt4-expectations-ai-2024-7">pushing the boundaries</a> of artificial intelligence, market excitement for it seems endless.But this enthusiasm expects too much from the technology in too little time, <a target="_blank" class="" href="https://corporate.vanguard.com/content/corporatesite/us/en/corp/vemo/economic-payoff-ai-coming-but-not-here-yet.html">Vanguard</a> wrote on Thursday.Wall Street is rife with upbeat forecasts about what AI could do to the economy and corporate profits. Most of them are pinned to a US workplace revolution and a productivity boom.That optimism has helped fuel strong stock gains, with the benchmark S&amp;P 500 up 18% year-to-date through Thursday.But Vanguard global chief economist Joe Davis thinks expectations are too high, and says that stocks are overvalued even if the AI boom plays out as anticipated.He estimates that US corporate profits would have to growth by 40% annually over the next three years to justify where stocks are trading now. For context, the S&amp;P 500's trailing one-year earnings growth rate through the second quarter of 2024 was 10.9%, according to <a target="_blank" class="" href="https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_081624.pdf">FactSet data</a>."I'm optimistic about the long-term potential of artificial intelligence to power big increases in worker productivity and economic growth," global chief economist Joe Davis wrote. "But I'm pessimistic that AI can justify lofty equity valuations or save us from an economic soft patch this year or next."He continued: "This is double the annualized rate of the 1920s, when electricity lit up the nation — not to mention economic output and corporate income statements."Such a historic surge in corporate performance looks even less probable if the economy cools down next year. Vanguard expects GDP to expand by just 1% to 1.5% in 2025.It's not that the investment firm has no faith in AI's potential — its research suggests 45% to 55% odds that AI will trigger a boom in labor productivity. Between 2028 and 2040, that could spur a 3.1% annualized rate of US growth in real terms.But investors need to let go of any notions that this will happen immediately, Davis said. While firms have <a target="_blank" href="https://www.businessinsider.com/how-much-big-tech-spending-on-ai-investments-2024-7">poured billions to advance</a> their position in the sector, some market players are incorrect in thinking that AI investing will reach $1 trillion in the near term:"$1 trillion in AI investment by 2025 would require 286% growth. That's probably not going to happen, which means we're unlikely to experience an AI-driven economic boom in 2025," he said.Some on Wall Street are much more pessimistic. BlackRock has said there's a strong chance that heavy AI investing will trigger <a target="_blank" class="" href="https://www.businessinsider.com/artificial-intelligence-ai-inflation-productivity-boom-interest-rates-fed-blackrock-2024-6">higher inflation</a> before any production boom can come. That could erode corporate profit growth.

US stocks are overvalued because of unrealistic expectations for AI-powered economic growth, Vanguard says

<ul class="summary-list"><li>Small-cap stocks are poised for a significant rally, Goldman Sachs' Greg Tuorto said.</li><li>The portfolio manager pointed to lower interest rates and a promising economic backdrop for small-caps.</li></ul>An overlooked part of the stock market is poised for big gains.That's according to Greg Tuorto, a portfolio manager at Goldman Sachs Asset Management who says he sees a big "catch-up" rally coming for small-cap stocks. He told CNBC in an interview on Thursday that that's due to a confluence of bullish factors, including lower interest rates, a promising economic outlook, and the upcoming presidential election, which could boost confidence in the sector.Tuorto noted that election years have historically led to strong gains for small-cap stocks. He sees the presidential election leading to positive developments in the economy, such as by increasing the supply of housing."Election years are usually positive catalysts for small-caps, and this has not been one of them. So there could be that powerful catch-up trade," he said.The interest rate environment looks favorable for small-cap firms, with central bankers <a target="_blank" class="" href="https://www.businessinsider.com/federal-reserve-interest-rate-cuts-mortgage-investment-credit-savings-2024-9">issuing a jumbo-sized 50 basis point cut</a> this week. Investors should expect two more rate cuts by the end of the year, Tuorto predicted, which should help ease financial conditions and boost investor confidence.Lower rates, combined with expected improvement in corporate earnings, could all lead to a boost in IPO and merger activity, another tailwind for small-caps, he added.The economy also looks poised to avoid a recession — another positive for small-cap firms, Tuorto said. GDP is estimated to run at 3% this quarter, according to the latest <a target="_blank" class="" href="https://www.atlantafed.org/cqer/research/gdpnow">Atlanta Fed GDPNow reading</a>, indicating solid growth for the economy."We've been waiting for this rates certainty. I think we also wanted to have a picture of whether we're going to get a soft landing, which I think kind of puts us more firmly in that camp," Tuorto said. "With the economy chugging along...it's a really nice backdrop for small caps."Still, he cautioned that investors need to be picky, as not every small-cap name will be a winner. "I think if you have that active, selective approach towards the small-caps space, you can not just outperform, but you can see some powerful upside momentum."Other forecasters have turned more bullish on small-cap stocks, despite the sector having a volatile year in 2023. Fundstrat's Tom Lee predicted small-caps could <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/small-caps-russell-2000-rally-outlook-sp500-selloff-fundstrat-tech-2024-7">rally as much as 40%</a>, thanks largely to easier Fed policy. The Russell 2000 surged 2% after the Fed cut interest rates on Wednesday, with the small-cap index up 12% year-to-date.

An under-the-radar corner of the stock market has the green light for a 'powerful' catch-up rally, Goldman Sachs portfolio manager says

You Searched For "power sector stocks" and got 3 results

Nuclear-power stocks slide after regulator rejects plan to power Amazon data center

Filip De Mott

US stocks are overvalued because of unrealistic expectations for AI-powered economic growth, Vanguard says

Filip De Mott

An under-the-radar corner of the stock market has the green light for a 'powerful' catch-up rally, Goldman Sachs portfolio manager says

Jennifer Sor

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