Every weekday, Jim Cramer’s CNBC Investing Club releases Homestretch, an actionable afternoon update, in time for the final hour of Wall Street’s close. Market Rotation: The S&P 500 had a tough day, dropping about 1%. The Nasdaq was even worse, dropping 2%. However, most stocks rose on the NYSE, with a 6-to-1 ratio of gainers to losers. For weeks, the criticism of the record rally has been its narrow leadership, with mega-cap tech and growth/momentum stocks driving the major stock indexes higher. On Thursday, the opposite happened, as these stocks provided the money to buy the rest of the market: housing, solar, real estate, utilities, cyclicals and small caps. These are the companies that benefit most from low interest rates. Leadership: Looking at trends, will the weak CPI in June be the catalyst for a shift in market leadership from growth to value? We think it’s too early to know, and we don’t see any changes to our portfolio given that we’ve already balanced growth and AI beneficiaries against the Fed’s interest rate cut move. That said, these cycles (the small-cap Russell 2000 surged about 3.5% on Thursday) tend to last about three days, allowing laggards to catch up. Something to consider: These cycles usually start when you least expect them, so we’re always mindful to lock in profits on popular tech stocks on the rise and gradually add quality, unpopular names on the decline, as we did with Meta Platforms and Palo Alto Networks on Monday. If the market continues to drag some of the AI ​​winners down over the next week, it could be an opportunity to increase exposure. We recently looked at some buying levels that investors without exposure to big tech companies should consider. Two or Three Rate Cuts: A 25 basis point rate cut was starting to be on the way for September before Thursday’s CPI release, but there was still a lot of debate about whether that would be the only rate cut this year. The likelihood of two or more rate cuts has increased after the market saw the CPI fall 0.1% month-over-month in June, and according to CME FedWatch, the market sees a roughly 50% chance of three rate cuts by the end of the year. Next up: Wall Street will be watching Friday morning to see whether the June Producer Price Index, a measure of the wholesale price index, will confirm the cooling seen in the CPI. The headline PPI is expected to rise 0.1% month-over-month and 2.3% year-over-year. Banks will also kick off their second-quarter earnings season before trading opens on Friday, with club names Wells Fargo, as well as JPMorgan and Citigroup due to report results. Morgan Stanley, another financial stock in the club, will report earnings this Tuesday. (For a complete list of Jim Cramer’s Charitable Trust stocks, see here.) Subscribers to Jim Cramer’s CNBC Investment Club will receive trade alerts before Jim makes the trade. Jim will buy and sell shares in the Charitable Trust portfolio 45 minutes after he sends out the trade alert. If Jim talks about a stock on CNBC television, we will execute the trade 72 hours after issuing the trade alert. The above investment club information is subject to our Terms of Use and Privacy Policy and Disclaimer. Receipt of any information provided in connection with the investment club does not create any fiduciary duty or liability. No specific results or benefits are guaranteed.
Traders work on the floor of the New York Stock Exchange (NYSE) on July 11, 2024 in New York City.
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Every weekday, CNBC Investing Club with Jim Cramer releases “Homestretch,” an actionable afternoon update, just in time for the final hour of trading on Wall Street.
