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Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street. (We’re no longer recording audio so we can get this new written feature to members as soon as possible.) Weakness on Wall Street: Stocks fell on Friday, with the Nasdaq Composite leading the way lower amid losses in tech heavyweights like Microsoft, Amazon and Alphabet. The tech-heavy Nasdaq fell for three days in a row, down about 1% and down about 0.7% on a weekly basis. The S&P 500 and the 30-stock Dow Jones index were also lower on Friday, but outperformed the Nasdaq on the week. Inflation was again in the spotlight on Friday after two better-than-expected reports on price pressures in the U.S. economy this week. The Federal Reserve’s policy-making arm will meet next week, which will have investors re-examining how central bankers incorporate recent economic data into their interest rate outlook. Markets still expect the Fed’s first rate cut to come in June, although the likelihood of the Fed keeping rates steady has been rising in recent weeks, according to CME Group’s FedWatch tool. Overall, the club believes the U.S. economy is performing reasonably well, making it increasingly unlikely that the Fed will need to cut interest rates in the next few meetings. In our view, a strong economy supporting corporate earnings and share prices is better than a market driven by hopes of rate cuts. Sector Focus: S&P 500 sectors saw heavy losses on Friday. Information technology, communications services and consumer discretionary were among the hardest hit, with each falling more than 1%. The Super Six are to blame for these moves. Microsoft and Apple – members of the information technology industry – fell around 2.4% and 1% respectively. Another big drag on the tech industry is Adobe, which has long been seen as a winner in artificial intelligence. Shares of the software provider plunged more than 14% late Thursday after the software provider issued weak guidance for the quarter. At the same time, the stock prices of Alphabet and Meta Platforms (home to the communication services industry) held by the club fell by approximately 1.3% each. Shares of e-commerce and cloud computing giant Amazon fell about 2%, putting pressure on the consumer discretionary category. Ulta Beauty also dragged consumer discretionary down 4% due to disappointing full-year profit guidance. Energy and materials were among the higher sectors in the S&P 500 on Friday. In the energy sector, gains were led by Valero Energy, which rose more than 3% after Bank of America upgraded the stock along with two refining industry peers outside the S&P 500. However, refinery players in the index, such as Marathon Petroleum and Phillips 66, also posted strong performances on Friday, boosting activity. The club’s only energy company, oil and gas producer Coterra Energy, had a lackluster day. Half a Drop: The VanEck Semiconductor ETF is coming off its worst week since early January, down about 2.5% over the past five sessions. However, despite some recent volatility, Nvidia, by far the world’s most valuable semiconductor company, has bucked the trend. The leading artificial intelligence chip maker is expected to post a tenth consecutive week of positive progress ahead of next week’s much-anticipated GTC meeting. During Friday’s morning conference, Jim Cramer said the overall weakness in this week’s semifinals was related to Nvidia’s GTC events. “I think that’s where people are positioning themselves for next week,” he said, when Nvidia CEO Jensen Huang will deliver a keynote speech talking more broadly about the future of artificial intelligence and the chip industry. “Everyone was nervous, and I didn’t know why,” Jim said. “I had read carefully everything Jason said in preparation for the interview with him, and I only saw the positives, but I recognized that it was the people who wanted to Take advantage of Broadcom and other chip companies riding the AI tailwind. Club holdings in Broadcom are down 5% this week. Looking Ahead: The Nvidia GTC meeting and the Fed meeting ending on Wednesday are the next key market events (please See here for a complete list of stocks in the Jim Cramer Charitable Trust.) As a subscriber to Jim Cramer’s CNBC Investing Club, you will receive trade alerts before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling. Issue a trade alert before selling stocks in his Charitable Trust portfolio. If Jim talks about a stock on CNBC TV, he will wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms Terms and Conditions and Privacy Policy, as well as our Disclaimer. No fiduciary duty or obligation exists or arises upon your receipt of any information relating to Investment Club. No specific results or profits are guaranteed.
Traders work on the trading floor of the New York Stock Exchange (NYSE) on February 29, 2024 in New York City, the United States.
Brendan McDermid | Reuters
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street. (We are no longer recording audio so we can make this new written feature available to members as soon as possible.)
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