Wall Street managed to finish higher despite a heavy rotation out of tech stocks on Thursday. The Dow Jones Industrial Average was the big winner of the week, rising nearly 1.6% as investors bought into economic and interest-rate sensitive stocks that hadn’t performed so well this year in the wake of positive inflation data. The S&P 500 and Nasdaq were up about 1% and 0.25% for the week, respectively. All three stock indexes closed near all-time highs. It’s quite remarkable that the Nasdaq was able to finish the week in the positive, considering that Thursday’s tech-led selloff had caused the Nasdaq to fall nearly 2% during the session. On that day, investors saw the weak June Consumer Price Index and the resulting increase in the number of expected Federal Reserve rate cuts this year as a reason to lock in profits in big tech winners and expand their portfolios with stocks that will benefit from lower borrowing costs.Confirmation of easing inflation in the Consumer Price Index (CPI) was not forthcoming on Friday morning, as the Producer Price Index (PPI) for June was slightly higher than expected. However, the PPI was not enough to spook bulls, and market odds still favored up to three Fed rate cuts this year, according to the CME FedWatch tool. Three of our club interest rate stocks (solar panel company Nextracker, Stanley Black & Decker, and Ford) were among the best-performing stocks this week. Friday also marked the start of second-quarter earnings season. Club name Wells Fargo was one of the big banks to report results. Investors sold shares on concerns that quarterly net interest income was below expectations and the bank’s full-year expense outlook was rising, driven in part by higher revenue from fee-based businesses, despite earnings per share and revenues beating expectations. We trimmed Wells Fargo’s position on July 5th due to concerns that there might be a news selling reaction to the earnings. Wells Fargo shares did indeed fall 6% after the earnings report. However, we see this decline as an opportunity and have upgraded the stock to a buy rating of 1. Earnings and the economy will also drive the market in the coming week. Economy June retail sales will be released on Tuesday, providing insight into where consumers are directing their purchasing power and how they feel about inflation. They are expected to fall 0.2% month-on-month. Housing starts and building permits will be released on Wednesday in June. Estimates are that construction starts will increase 4.2% month-on-month, with about 1.4 million permits issued. Industrial production and capacity utilization data for June will also be released on Wednesday. Industrial production is expected to rise 0.3% month-on-month. Capacity utilization is expected to increase slightly to 78.4%. Earnings club powerhouse Morgan Stanley will report its second-quarter earnings before the market opens on Tuesday.We expect the momentum in investment banking revenues to continue, with trading and fees growing year over year. The volatility could come from the wealth management business. We expect the market to scrutinize the amount of net new assets the company brought in during the quarter and margins that have been under pressure from lower sweep balances. Abbott Laboratories will report its second-quarter results before the open on Thursday. We expect momentum from the first quarter to continue, but a stronger U.S. dollar could weigh on Abbott’s heavy reliance on international sales. Our focus will be on details regarding the Libre device business and the upcoming launch of two new products, Libre Rio and Lingo. Abbott beat and upwardly revised its full-year outlook in the first quarter, but its shares have fallen since the announcement, with the baby formula lawsuit taking a back seat to fundamentals. We continue to believe this concern is much more manageable than the market cap decline suggests. However, we recognize that it will take time for investors to look past it. Monday, July 15 Pre-bell: Goldman Sachs (GS), BlackRock (BLK) Tuesday, July 16 8:30am ET: Retail sales Pre-bell: Morgan Stanley (MS), Bank of America (BAC), UnitedHealth (UNH), Progressive (PGR), Charles Schwab (SCHW), PNC Financial (PNC), State Street (STT) After the bell: Interactive Brokers (IBKR), JB Hunt (JBHT), Omnicom (OMC), Pinnacle Financial (PNFP) Wednesday, July 17 8:30am ET: Housing starts and building permits 9:15am ET: Industrial production and utilizationBefore the bell: Johnson & Johnson (JNJ), Ally Financial (ALLY), US Bancorp (USB), First Community (FCCO), First Horizon National (FHN), Northern Trust Corporation (NTRS), Citizens Financial (CFG) After the bell: United Airlines (UAL), Alcoa (AA), Discover (DFS), Kinder Morgan (KMI), Crown Castle (CCI), Steele Dynamics (STLD), SL Green Realty (SLG), Equifax (EFX) Thursday, July 18 at 8:30 AM ET: Initial unemployment claimsFriday, July 19 Before the Bell: Abbott Laboratories (ABT), Taiwan Semiconductor (TSM), Nokia (NOK), Cintas (CTAS), Domino’s Pizza (DPZ), D.R. Houghton (DHI), Blackstone (BX), Infosys Technologies (INFY), KeyCorp (KEY), Marsh & McLennan Companies (MMC), M&T Bank Corp (MTB), Snap-on (SNA), Forrester Group (FOR), Novartis (NVS), Textron (TXT), ManpowerGroup (MAN) After the Bell: Netflix (NFLX), Intuitive Surgical (ISRG), PPG Industries (PPG), AAR (AIR) Friday, July 19 Before the Bell: American Express (AXP), SLB (SLB), Fifth Third Bancorp (FITB), Halliburton (HAL), Comerica (CMA), Travelers (TRV), Huntington Bancshares (HBAN), Regions Financial (RF) (Click here for a complete list of Jim Cramer’s Charitable Trust stocks.) Subscribers to Jim Cramer’s CNBC Investment Club receive trade alerts before Jim makes any trades. Jim waits 45 minutes after sending a trade alert before buying or selling shares in the Charitable Trust’s portfolio. If Jim talks about a stock on CNBC television, Jim waits 72 hours after issuing a trade alert before executing the trade. 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Morgan Stanley CEO Ted Pick speaks on CNBC’s Squawk Box during the World Economic Forum Annual Meeting in Davos, Switzerland on January 18, 2024.
Adam Gallici | CNBC
Wall Street ended the week higher despite heavy selling in tech stocks on Thursday.
