There was no shortage of stock market declines last week. A combination of surprising economic data, new financial results and escalating conflict in the Middle East drove the market mainly lower. The S&P 500 closed down 2% for the week on Friday, as the market-wide index bounced between positive and negative levels over the past five trading days. During the same period, the Nasdaq fell 1.2% and the Dow Jones Industrial Average fell 3%. The three major averages fell for the second consecutive week. The S&P 500 index has risen in only one of the past five weeks as concerns about AI disruption continue to weigh on the market. The tech-heavy Nasdaq has been positive in just one of the past eight weeks. We’ll see if the market can break its losing streak on Monday. In the meantime, here are three forces that have moved Wall Street and club portfolios over the past five sessions. Intensifying Middle East War This is the first week of trading since the US and Israel first began bombing Iran last Saturday, which quickly weighed on stock prices around the world. The conflict has spread across the Middle East, with no clear end to the fighting in sight. President Donald Trump said Friday that there will be no end to the war without Iran’s “unconditional surrender.” Qatar’s Energy Minister Saad Al Kaabi also said in an interview with the Financial Times published early on Friday that energy producers in the Gulf may have to halt production within days due to the situation in the Middle East, which he said could “bring the global economy down.” “If this war continues for several weeks, it will affect gross domestic product (GDP) growth around the world,” the energy minister said. In response, oil prices soared amid concerns about disruptions to global fuel supplies. West Texas Intermediate crude topped $90 a barrel on Friday, ending the week up 35%. This was the largest profit since oil futures trading began in 1983. In an analysis earlier this week, we explained why oil will be key to the stock market during the Iran war. Here’s Jim Cramer’s advice for this time of year: Please make your choice. Don’t panic and sell everything. “Those who flee at a moment like this can never return,” he told a morning assembly Tuesday. This is the exact approach we took when the club initiated a position in the healthcare stock Cardinal Health on Monday. The U.S. medical supplies maker generates almost all of its revenue domestically, so its stock price shouldn’t be too sensitive to developments in the Middle East. The club has since acquired the Cardinal two more times to expand the position. The club also sold part of BlackRock on Monday and exited the financial institution altogether the next day because private credit concerns were too distracting. We used our cash pile, which was 15% at the time, to scoop up Alphabet’s struggling stock. Google’s parent company has a clearer path to monetizing its AI spending than its big tech peers. Mixed economic indicators Investors were also affected by the cross-current of economic indicators. Positive news mid-week helped stabilize the market. It didn’t last long. The S&P 500 rose nearly 0.8% on Wednesday after payroll firm ADP reported that the number of private payrolls rose by 63,000 in February, beating the Dow Jones consensus estimate of 48,000. In the same session, the market again showed positive signs of economic activity. The Institute for Supply Management’s services PMI hit its highest level last month since July 2022. The price paid by service organizations for materials and services also fell from 66.6 to 63. This can be seen as a sign of encouraging inflation. However, unexpectedly weak February employment data released on Friday pushed stock prices lower. Nonfarm payrolls fell by 92,000 jobs last month, compared with the Dow Jones forecast for a monthly gain of 50,000. The unemployment rate also rose to 4.4% from 4.3% the previous month, according to the Bureau of Labor Statistics on Friday. Jim warned that the weak pay report shows that job losses due to AI are here. Overall, mixed indicators cloud the outlook for the U.S. economy as the Federal Reserve prepares for its next interest rate decision in late March. According to the CME FedWatch tool, the market has priced in about a 96% probability that the central bank will keep the benchmark interest rate unchanged. Impact on Earnings Broadcom on Wednesday night announced first-quarter earnings and revenue results. Management also issued better-than-expected guidance and painted an increasingly positive picture for the company’s custom chip business. Broadcom’s stock price soared following the announcement, ending last week up 3.4%. Corning, an optical equipment maker with dull prints. Broadcom’s stock price fell nearly 7% on Thursday after Hock Tan, the company’s famous CEO, said the market’s optimism about expanding the use of fiber-optic technology in data centers had shattered. This was a negative for Corning. Many on Wall Street were betting that Corning’s fiber products would eventually replace copper in data centers, making Corning a key cog in building AI. Mr Tan’s statement did not change our view and the stock price drop was an overreaction. CrowdStrike, the club’s other name, beat revenue and revenue expectations on Tuesday. CEO George Kurtz allayed concerns that artificial intelligence would erode the company’s cybersecurity market share, calling the technology “an increasingly significant growth opportunity.” Kurtz added that the company’s “technology, team and ecosystem are well positioned to continue winning.” CrowdStrike stock has risen more than 15% since the beginning of the week. Additionally, Costco Wholesale announced its financial results on Thursday, impressing with strong quarterly sales momentum. We raised our price target from $1,050 to $1,100 per share, but maintained our stock rating of 2, equivalent to Hold. (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
