Every weekday, Jim Cramer’s CNBC Investment Club releases the Homestretch, a practical afternoon update to coincide with the last hour of trading on Wall Street. Markets: Stocks erased most of their losses on Friday, but still fell this week. The S&P 500 was expected to fall nearly 2% this week. AI companies and other “high flyers” have been under pressure in recent days as the market pushes back on funding for stretch multiples and AI infrastructure projects. Data on the labor market were also mixed. ADP data on Wednesday showed private sector payroll growth in October was stronger than expected. But just moments later, Wall Street learned of a sharp increase in layoff announcements last month, signaling trouble looming in the U.S. labor market. The government shutdown is starting to take a noticeable toll on the economy. The groundings are weighing on sectors such as air travel, as seen by the FAA’s spate of flight cancellations. Personal consumption may also soften. There were already early signs, as the latest consumer sentiment measures were near record lows. However, this is a fixable issue. Short-term GDP hits that occur during shutdowns typically recover in the following quarter. But this happens to be the longest in the country’s history. Finally, the club acquired three companies this week, including Starbucks, Boeing, and GE Vernova. Still, the company has ample cash, which accounts for about 7% of its total portfolio. Our plan is to continue to deploy capital opportunistically as prices decline. Earnings season: About 90% of S&P 500 companies report third-quarter results, and the percentage of positive surprises has declined again since last week. Of all companies that reported, 77% realized positive revenue windfalls, according to FactSet data. That’s down from 79% last week. Meanwhile, 82% reported a positive earnings per share surprise, down from 83% in the previous week. Still, the beat rate is above the 5-year and 10-year averages. What’s next: There won’t be many major quarterly reports next week, but some of the key quarterly reports will be Club Holdings’ Cisco Systems and Disney. CoreWeave, On and Applied Materials are also participating. It was also supposed to be an important week for the release of government economic data. However, consumer price index, producer price index, and retail sales are likely to be delayed due to the shutdown. (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.
