This week, the Federal Reserve gave Wall Street a reality check, but the S&P 500 refused to let go of its weekly winning streak. Positive war developments paved the way. The S&P 500 rose 1.1% on Thursday as investors shrugged off earlier monetary policy concerns, causing a 1.2% decline. The Nasdaq’s 1.9% gain partially offset its 1.3% decline in the previous session. Oil prices plunged this week after the US and Iran signed a memorandum of understanding to extend the ceasefire and open the Strait of Hormuz, supporting stock prices. Chipmakers also rose. Let’s take a closer look at what moved Wall Street this week. A New Era for the Fed So what caused the big midweek selloff that tilted the market mostly negative? Simply put, investors were spooked by Fed policymakers predicting a possible rate hike to combat stubborn inflation. The signal came after the central bank left interest rates unchanged at the end of its two-day June meeting. In a press conference after the board meeting Wednesday afternoon, new Chairman Kevin Warsh said officials are committed to achieving the Fed’s goal of bringing inflation down to 2%. Warsh canceled the much-watched policy statement from the Fed meeting and announced a series of task forces to restructure the Fed. The market decline deepened between Warsh’s press conference and the close on Wednesday, making it the S&P 500’s worst performance on the first Fed day under a new chairman since 1994. Still, the stock rebounded the next day, ending the shortened four-session trading week in the green. The S&P 500 rose 0.9%, marking its 11th winning week out of the past 12. The Nasdaq rose 2.4%. The market was closed on Friday for the June 1st public holiday. Chip makers in tears Our chip stocks continued to win this week. The club that owns Intel rose 10.6% to a record high on Thursday after President Donald Trump said Apple would work with semiconductor companies to develop and design chips in the United States. This brings Intel’s weekly gain to 7.6%. Two other clubchip companies, Nvidia and Broadcom, followed suit, rising 2.9% and 4.7%, respectively, on Thursday. Arm rose nearly 5% to a record high. For the week, Nvidia rose 2.7%, Broadcom rose 7.7% and Arm finished up 15.4%. The iShares Semiconductor ETF (SOXX) is up nearly 7.3% over the same period. Jim Cramer has been enthusiastic about Inter lately, and Thursday’s news further strengthened his belief. We added a position on Tuesday. Intel’s foundry business and the company’s critical role in supplying central processing units to data centers are the main reasons we launched earlier this month. Jim called Inter his favorite stock on Wednesday during the club’s June monthly meeting. “This is my No. 1 name,” he reiterated during Thursday’s morning meeting. “It’s not Nvidia anymore.” To be sure, the strength of semiconductor stocks didn’t quite extend to broader technology. Club holding companies Microsoft, Amazon, Metaplatform and Alphabet were hit hard by Wednesday’s Fed speech as investors turned to “safe haven” groups. With the exception of Microsoft, the rest of the companies ended the week on a high. But their weekly profits pale in comparison to most chipmakers. Meta and Amazon rose 1.8% and 2.5%, respectively. Google’s parent company Alphabet rose 2.3%. Microsoft, a laggard in the group, fell 2.9% over the period. War on hold (for now) Stocks soared on optimism over a U.S.-Iranian war earlier in the week after President Trump announced the two countries had agreed to a memorandum of understanding aimed at building lasting peace. Follow-up talks were scheduled to take place on Friday after both sides signed the MOU. However, such negotiations did not materialize. The deal gives the United States and Iran 60 days to reach a final peace agreement. We added a position in Capital One as consumer banks benefit from lower oil prices. U.S. oil prices have fallen nearly 10% this week, with the national average for a gallon of unleaded gasoline below $4. “This week we took bold action at Capital One, a company that went from a company that could have made huge profits to almost nothing in a painful back and forth,” Jim said at the monthly meeting in June. (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.
