Trump’s China threat slams stocks — plus, our best, worst of bull market
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets: Stocks were selling off to close the week after President Donald Trump threatened a “massive” tariff increase on China amid a dispute over rare earth minerals. Over the summer, Trump cautioned that he would place steeper tariffs on China if it curbed exports of rare earth magnets. This announcement, however, still surprised the market because trade relations appeared to have improved in recent months. There are a few reasons why the magnitude of this decline was so sharp. The president’s warning gave investors a reason to take profits in AI-related names that have soared over the past few weeks. Also, it is Friday, and that means investors want to lock in gains and reduce their stock exposure out of concern that tensions could escalate further over the weekend. Volatility has also been pretty calm lately. It was the first 1% drop for the S & P 500 since Aug 1. The index closed down 2.7%. The Nasdaq was off roughly 3.6%. For the Club, we are not going to overreact to a single social media post from the president. Trump’s trade playbook has often been to talk tough initially, then ease off some of the threats once a deal or some form of middle ground is in sight. We ill adjust if these threats become reality. Anniversary: The current bull market in stocks is three years old on Sunday, Oct. 12. Since the market is closed on the weekend, we’re looking at the Investing Club portfolio from Oct. 12, 2022 – which was a Wednesday back then – to Friday just after 2 p.m. ET. Not surprisingly, our best performer is Nvidia . (In case you missed it, watch Jim Cramer interviewing Nvidia CEO Jensen Huang at this week’s October Monthly Meeting.) Over that stretch, the AI chip powerhouse soared roughly 1,527%. The next three winners are also tech-related. Broadcom , a designer of custom, purpose-built chips, jumped more than 665%; Meta Platforms , the Facebook, Instagram, Threads, and WhatsApp powerhouse, gained almost 458%; and cybersecurity firm CrowdStrike gained over 224%. The bottom four performers during the three-year bull market are drugmaker Bristol Myers Squibb , down more than 36%; sports apparel icon Nike , down nearly 26%; as well as life sciences firm Danaher and coffee giant Starbucks , down nearly 9% each. Next week: The start of third-quarter earnings season is approaching. More than 30 companies in the S & P 500 are scheduled to report next week, with big banks like Goldman Sachs , Wells Fargo , JPMorgan , and Citigroup , kicking things off on Tuesday. BlackRock , the world’s largest asset manager, also reports results Tuesday, along with Johnson & Johnson . On Wednesday, we’ll hear from Abbott Laboratories , as well as Bank of America , and Morgan Stanley . Other notable reports next week are American Express , CSX , Charles Schwab , SLB , and Prologis . (See here for a full list of the stocks in Jim Cramer’s Charitable Trust, including NVDA, AVGO, META, CRWD, BMY, NKE, DHR, SBUX, GS, WFC, BLK.) — Matthew J. Belvedere contributed to this report . As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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