2 reasons why stocks are rallying Wednesday, defying Iran war fears
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 are solidly higher even as the war in Iran continues. It’s been a volatile few days, yet in afternoon trading Wednesday, the S & P 500 remarkably turned higher for the week. A change from the past few days has been steadier conditions in the oil market. Because traders factor in a “war premium” into the price, think of oil as a very rough “mark-to-market” way to view the conflict in the Middle East. For most of Wednesday, it was the first day that oil traded lower since the war began. We’ve repeatedly pointed out that the market will likely take its cue from the oil markets. U.S. crude oil initially dropped after Treasury Secretary Scott Bessent said on CNBC that the Trump administration has “a series of announcements” it plans to make in support the oil trade. We’ll see what else the White House has in store, but these comments suggest officials are aware of the inflationary pressures that come with surging energy prices. The market also got a boost from upbeat economic activity . Of course, the conflict in the Middle East is going to take up the market’s mindshare, but we cannot lose sight of economic development and how companies are performing. Payroll processor ADP reported that private payrolls in February increased 63,000, exceeding the Dow Jones consensus estimate for 48,000. February represented a big jump from the downwardly revised 11,000 in January. We’ll get a firmer picture of the labor market when the nonfarm payrolls report comes out Friday, but ADP calmed immediate fears of job weakness. In another upbeat sign about the economy, the Institute for Supply Management’s Services PMI for February increased to 56.1, marking the highest level since July 2022. Prices paid by services organizations for materials and services also dropped to 63 from 66.6 and that could be viewed as an encouraging sign on inflation. Apple’s string of new product announcements continued . The company announced the MacBook Neo, which is its new lightweight laptop with a starting price of $599. That’s significantly lower than the latest MacBook Air and MacBook Pro prices, which start at $1,099 and $2,199, respectively. The Neo appears to be a great product for students and budget-conscious shoppers who want to remain in the Apple ecosystem but don’t want to spend four figures on a higher-performing laptop with features they probably won’t ever use. The Mac installed base reached another all-time high in Apple’s December quarter, and CEO Tim Cook noted on the earnings call in late January that “nearly half of customers who purchased a Mac” were new to the product. With the Neo giving Apple a toehold in the lower-priced laptop category, it opens the door to there being even more brand-new Mac buyers. Finally, the affordable pricing is also notable given rising memory costs, which will likely be passed through to consumers across the consumer electronics market. Apple and others like HP Inc. have signaled they’re taking pricing actions, so being able to start at $599 stands out in these market conditions. Up next, after the closing bell , Club name Broadcom , Okta and American Eagle Outfitters report earnings. Before the opening bell on Thursday, we’ll see earnings from Ciena , Kroger and Burlington Stores . On the data side, we’ll see the government’s weekly jobless claims report, as well as layoffs data from outplacement firm Challenger, Gray & Christmas. (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 . 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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