Stocks rebounded on Friday, but it wasn’t enough to reverse losses from earlier in the week. All three major stock averages rose, with the Dow Jones Industrial Average and S&P 500 each up about 1% and the Nasdaq Composite up 0.9% after New York Fed President William Williams indicated that a December interest rate cut was still on the table. He argued that a weak labor market posed a greater threat to the country’s economy than rising inflation. Expectations for next month’s rate cut soar: On Friday, markets were pricing in a roughly 71% chance of a 25 basis point rate cut next month, according to the CME FedWatch tool. That’s a big reversal from the day before, when odds were just 39%. Indeed, investor sentiment was low on Thursday after the September jobs report was delayed and the outlook for further interest rate cuts this year became murky. Investors also remained concerned about the valuations of companies related to artificial intelligence and large spending on data centers. Despite Friday’s move, the average of the three major stocks still posted significant losses this week. The S&P 500 fell about 2%, as did the Dow 30, and the Nasdaq fell 2.7%. .SPX YTD Mountain S&P 500 (SPX) Year-to-date Earnings Nvidia’s quarterly earnings report also moved the market. Wall Street always closely monitors the company’s releases, as many see the chipmaker as a beacon of the health of the artificial intelligence industry and the market as a whole. Nvidia announced impressive results Wednesday night, beating Street expectations in both revenue and bottom line. Management also raised its sales outlook for the current quarter. The club raised its price target to $230 from $225 and maintained a 2 rating on the stock, equivalent to a hold. Immediately after that, the stock market recorded a dizzying rise into Thursday morning, with high-tech and AI-related large-cap stocks becoming active. However, the rebound slowed in the afternoon. Other revenue we tracked came from the following club names: Home Depot , Palo Alto Networks , and TJX Companies. Home Depot on Tuesday reported lower quarterly profits, and management lowered the company’s full-year outlook. Stocks fell after another disappointing quarterly report from the home improvement retailer. We still think this is one of the better ways to deal with falling interest rates. As a result, the club purchased additional Home Depot stock shortly after its release. We have lowered our price target from $440 to $420 to reflect management’s latest forecast. TJX Companies posted higher revenue and bottom line results for the quarter on Wednesday morning. In fact, the off-price retailer delivered better-than-expected results for three consecutive quarters in each of its four business segments. Although retail stocks fell following the results, we view this decline as a sign of profit-taking rather than a fundamental problem. All in all, TJX is a bright spot in a depressed retail world. The club raised TJX’s price target from $150 to $160 and maintained the stock’s rating of “1,” equivalent to “buy.” Palo Alto Networks conducted a beat-and-raise quarter Wednesday night. The cybersecurity leader beat estimates for key metrics including Next Generation Annual Recurring Revenue (ARR). ARR is important to Palo Alto because it can highlight the success of management’s “platforming” strategy of bundling products and services. The company’s decision to acquire cloud management and monitoring platform Chronosphere was also a good one. The deal, worth about $3.35 billion, could make Wall Street analysts even more bullish on the cyber stock given Chronosphere’s solid ARR growth. Portfolio Movement Home Depot wasn’t the only deal this week. We had six other initiatives, including a new stock launch. They also added two names to the bullpen. Consumer goods giant Kimberly-Clark and pharmaceutical company Johnson & Johnson joined Monday’s bullpen as the club explores opportunities outside of the AI trade. In the case of Kimberly-Clark, its stock has been unfairly punished since the company announced plans to buy Tylenol maker Kenvue a few weeks ago. But there’s a lot to like about this deal. With Kenvue now under the ownership of Kimberly-Clark, the combined company will own 10 different brands worth $1 billion. It will also become the world’s second-largest consumer packaged goods company. For Johnson & Johnson, one of the reasons we like this stock is its strong oncology portfolio. The next day, the club cut Disney’s status in half following a disappointing financial report in early November. We realized a return of approximately 3% on the stocks we purchased from 2022 to 2023. “The company is now in a much better financial position than it was three years ago, with an improved balance sheet and cost profile. However, it has not been able to offset the long-term decline in its linear network business as quickly as we had hoped,” the company said in a trade alert. On Wednesday, we completely backed away from the Disney position. The company sold Eli Lilly stock on Tuesday, locking in a 330% gain on 2022 purchases. The club raised Eli Lilly’s price target to $1,100 per share from $925 and lowered its hold equivalent rating to 2. The stock reached an all-time high on Friday, pushing its market capitalization above $1 trillion. Lilly became the first pharmaceutical company to do this. We received the cash from the sale of Lily along with the Disney decorations earlier this month and started a new position at Procter & Gamble. It may have come as a surprise to members as we added another consumer packaging product name to our bullpen earlier this week: Kimberly-Clark. However, I currently believe that Procter & Gamble is better run. “Procter & Gamble has one of the strongest growth histories in its category,” we said in a trade alert. “The consumer brands powerhouse behind classic brands such as Tide, Crest and Gillette showed its latest financial results marking its 40th consecutive quarter of organic sales growth, putting the business on track for its 10th consecutive year of core earnings per share growth.” In addition to Wednesday’s exit from Disney, the club purchased an additional stake in DuPont spinoff Qnity Electronics. Although the stock price has declined throughout the month, we saw this as an opportunity to expand our position. We love that Qnity is contributing to the growth of the semiconductor industry. Finally, the club bought more Corning stock on Thursday amid a broader market decline. “Our discipline is to always look for quality companies to buy when the market is oversold, so we’re picking on this weakness and nibbling on shares of fiber-optic cable leader Corning,” we said in a trade alert. (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.
