The Nasdaq’s worst week since April, 3 trades, and earnings
It was a terrible start to November on Wall Street. The tech-heavy Nasdaq sank just over 3% in its worst weekly performance since early April. The S & P 500 fell 1.6% for the week. Both stock measures broke three-week winning streaks.This week’s market decline, which followed a strong October, can be chalked up to two reasons. First, investors grew concerned about the eye-watering valuations of stocks tied to artificial intelligence. Case in point: Nvidia lost its $5 trillion market cap designation in a weekly loss of 7%. The weakness in Nvidia was exacerbated by the realization that China would not be opening back up in a meaningful way for the powerhouse of AI chips. While management has not included China sales in its outlook for months, many investors still thought it could happen. Still, we maintain our long-held “own it, don’t trade” thesis on Nvidia. .SPX .IXIC 5D mountain S & P 500 and Nasdaq weekly performance Second, there were emerging signs that the government shutdown, now the longest in U.S. history, was starting to harm the economy. Job cuts last month reached their highest levels for any October in 22 years, according to Thursday’s reading from outplacement firm Challenger, Gray & Christmas. A day later, the latest monthly consumer sentiment survey from the University of Michigan registered nearly its worst reading ever. These reports from private organizations have taken on added importance since the shutdown, which started on Oct. 1 and has delayed most government economic data. During this week of market turmoil, we executed three trades. On Monday, we added to our Starbucks position. The stock has taken a beating with other restaurant names on fears of a weakening consumer. In this case, we think the decline is overblown. After all, the turnaround story under CEO Brian Niccol remains strong. “With shares trading back to their ‘Liberation Day’ tariffs lows in early April, we see this recent weakness as an opportunity to slowly scoop up more,” Jeff Marks, the Investing Club’s director of portfolio analysis, wrote in a trade alert. “Niccol has embarked on an ambitious plan to bring back the coffeehouse atmosphere and fix its stores through a new operating and staffing model called Green Apron Service . It’s taken a few quarters, but the turn has finally started.” The Club also snapped up more Boeing stock Tuesday. Shares dropped significantly after the aircraft maker’s earnings report last week, caused by a larger-than-expected charge on its 777X program. Yes, the quarter was a frustrating setback. But the decline presented a great opportunity for long-term investors like us. “The turnaround under Boeing CEO Kelly Ortberg is still progressing nicely, driven by better execution on its 737 program,” Marks wrote in a trade alert. “With production moving from 38 airplanes per month to 42 — then eventually 47 and 52 under FAA guidance in the future — Boeing’s ability to make and deliver more planes will lead to strong free cash flow generation in the years ahead.” The market’s pullback Thursday gave us a chance to buy more GE Vernova stock. Shares have tumbled as AI-linked names have been scrutinized for their valuations. That’s because GE Vernova is one of the world’s largest producers of gas-fired turbines, which are used to create electricity and electrification products found in data centers. The company’s sales heavily benefit from the insatiable demand for more energy due to the frantic AI infrastructure race. “We are using this downturn to buy more shares since we still have a positive long-term outlook on the need for increased electricity investment,” Marks wrote in another trade alert. Eli Lilly made headlines this week. President Donald Trump on Thursday announced a GLP-1 pricing deal with Lilly and rival drugmaker Novo Nordisk that would lower prices for certain weight-loss treatments in exchange for coverage in Medicare and Medicaid programs. This was huge news for Lilly because it can expand access to Zepbound, increasing the blockbuster weight-loss drug’s total addressable market. Eli Lilly is also behind GLP-1 Mounjaro, but it was not included in the deal. That’s not the only piece of good news for Lilly. Management announced positive mid-stage trial results for its experimental amylin obesity drug. The once-a-week shot called eloralintide was shown to help patients shed pounds while maintaining muscle mass. Shares of Eli Lilly were up 7% for the week. this week. Quarterly earnings and spinoff news were also in focus. Eaton delivered a mixed third-quarter report Tuesday morning, which beat on adjusted earnings per share (EPS) but missed on revenue and organic sales. Although the headline results were uneven, the Club still found bright spots in the release. Overall segment profit and profit margin, for example, beat expectations and reached new quarterly records. DuPont posted a beat on the top and bottom line Thursday morning — less than a week after the spinoff of Qnity Electronics. Shares of DuPont slipped right after because of noise around quarterly numbers due to the split and divestiture of its Aramids business. Still, the underlying fundamentals for the new DuPont look strong, and the stock was our biggest winner on the week, up 16.5% to nearly $40. The Club downgraded shares to our 2 rating . We also adjusted our price target to $44. Solstice Advanced Materials, which recently split from Club name Honeywell , reported earnings on Thursday with no major surprises. There was a 7% topline growth, which was provided when Honeywell posted its own results just two weeks ago. Plus, it was all fairly consistent with what was said at an investor day last month. Texas Roadhouse shared a mixed earnings report Thursday night, posting better-than-expected comps despite concerns of softening consumer spending. However, higher beef prices caused the steakhouse chain to raise its commodity inflation outlook, which has weighed on Texas Roadhouse’s profitability for some time. We’re not giving up on the Club stock yet. Wall Street heard from Qnity on Thursday night, too. Not earnings, we learned about those numbers when DuPont reported, but management delivered a business update after the close, which made us hopeful of the company’s position to keep growing from secular trends like AI in the years ahead. The Club issued a buy-equivalent 1 rating on the stock and a price target of $110. Qnity stock has been volatile and closed Friday just over $92. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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 . 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