Afternoon Update from CNBC Investing Club
Market Overview
Every weekday, the CNBC Investing Club with Jim Cramer presents the Homestretch — a crucial update just before the final trading hour on Wall Street. On this particular day, the S&P 500 was up over 3%, bolstered by a temporary agreement on tariff reductions between the U.S. and China. As a result of this rally, the index was nearing a breakeven point for the year.
Market Trends
Consumer discretionary and technology stocks were taking the lead in the market. However, chasing big rallies is not typically our strategy, especially in a volatile market influenced heavily by news. As of Friday, the S&P Short Range Oscillator reflected its 11th consecutive session in overbought territory, indicating that we might look to cut back on stocks.
Pharmaceutical Stocks React
Monday’s rally was significant enough to lift even pharmaceutical stocks, which had initially fallen due to concerns about President Trump’s executive order aimed at reducing drug prices in the U.S. Shares from Club favorites like Eli Lilly and Bristol Myers Squibb were affected. Jim noted that uncertainty surrounding the executive order was a reason for the stocks’ declines, as the administration’s plans may need Congressional backing.
Disney’s Success
Disney’s shares continued their upward trend, marking five consecutive days of gains following a positive earnings report. After a 15% jump over three days, shares rose another 4.5% on Monday amid hopes that a recession driven by trade tensions could be avoided. Jim described Disney’s latest earnings as “tremendous,” asserting a buy-equivalent rating and a $130 price target.
Capital One’s Performance
Another stock experiencing a rally is Capital One, with shares increasing by over 6% on Monday and surpassing the $200 mark. Similar to Disney, the optimism surrounding the stock also stems from expectations that recession fears are easing. Jim remains bullish on Capital One, especially with its imminent acquisition of Discover.
Upcoming Earnings Reports
Looking ahead, companies like Rigetti Computing, Hertz Global, and Simon Property Group are set to announce earnings after Monday’s market close. Early Tuesday will bring reports from JD.com, Honda, and Under Armour, all affected by trade tensions. A key event to watch is the consumer price index report scheduled for release at 8:30 a.m. ET.
Investment Alerts
As a member of the CNBC Investing Club, subscribers will receive trade alerts prior to any transactions. Jim allows a 45-minute gap post-alert before executing trades in his charitable trust’s portfolio. For stocks discussed on CNBC, a 72-hour wait is observed before execution. Please note that all investment information is subject to our terms and conditions.
