Stock market records, Fed rate cut, trades, and new iPhones
The stock market reached records again this week, propelled by the Federal Reserve’s decision to cut interest rates for the first time since last December. The S & P 500 and Nasdaq hit a number of all-time closing highs this week, one as recently as Friday, after the Fed announced a quarter-point reduction to the overnight lending rate Wednesday afternoon. Central bankers signaled there could be two more cuts in 2025. This Fed’s decision puts the benchmark funds rate in a range between 4% to 4.25%. While stocks were initially up and down on Wednesday’s news, investors ultimately celebrated the highly anticipated decision in the sessions to come. The S & P 500 and tech-heavy Nasdaq gained roughly 1.2% and 2.2%, respectively, this week. During Thursday’s Monthly Meeting , Jim Cramer said that after the Fed rate cut, “it does feel for the moment that we are out of the woods until we get the next employment number the morning of Oct. 3, and the beginning of earnings season three weeks from now.” Looking forward, Jim said the market will also be focused on the Fed’s next meeting in late October. He described it as a potential “source of tremendous trepidation because the tariffs will be more fully hashed out, and you are going to see your costs go higher.” He continued, “I don’t expect a nightmare. I do expect that the undercurrent is going to remain, hotter prices, and this Fed chief will not want to cut rates into that environment.” .SPX YTD mountain The S & P 500 (SPX) year-to-date performance Also, this week, the Club executed two trades as the market pushed higher. On Monday, we some profits in Broadcom to right-size our position, after a strong run had swelled the chip stock to our largest-weighted position above 5%. The sale does not reflect a change in our Broadcom thesis, as we still wholeheartedly believe that the stock will benefit from accelerating artificial intelligence revenue. We realized a gain of roughly 88% on shares purchased in September 2023. The Club bought more Boeing stock on Friday, adding to our most recent portfolio addition. With the stock down roughly 10% from its recent highs, it feels like a good time to build our position in the aircraft maker. After all, the company’s underlying fundamentals haven’t changed. Boeing is still seeing a huge increase in orders because of President Donald Trump ‘s trade agreements. Plus, the turnaround in its balance sheet still looks promising. Three of our stocks made headlines this week, including CrowdStrike, Nvidia and Apple. CRWD YTD mountain CrowdStrike YTD CrowdStrike shares surged more than 12% on Thursday after CEO George Kurtz shared a lofty multi-year outlook for the cybersecurity company’s financials at its investor day during the session prior. CrowdStrike provided visibility into metrics as much as a decade out. During the Wednesday evening event, management targeted $20 billion in ending annual recurring revenue (ARR) in fiscal year 2036, a 15% compound annual growth rate (CAGR) from the $10 billion ARR target for fiscal year 2031. CrowdStrike executives also had positive things to say about other key metrics such as free cash flow (FCF) margins. Club take: “This is an example of what you want to own,” Jim said on CrowdStrike during Thursday’s September Monthly Meeting. He also reiterated his confidence in Kurtz and company’s ability to continuously innovate in a fast-growing market. Jim, however, did acknowledge the elephant in the room: CrowdStrike’s stock price. “CrowdStrike is never going to be cheap,” he said. But, the high price-to-earnings multiple seems fair to us because of CrowdStrike’s great growth prospects and position as a leader in its industry. NVDA YTD mountain Nvidia YTD Nvidia announced a surprising partnership with beleaguered Intel on Thursday, which should be a boon for shareholders of both companies. This includes Nvidia buying $5 billion worth of Intel common stock. Other backers of Intel include Softbank and the U.S. government. Nvidia said it will also collaborate with Intel to make artificial intelligence systems for data centers, bringing together the company’s graphics processors (GPUs) and networking with Intel’s central processing units (CPUs). Nvidia and Intel stock rose roughly 3.5% and 23%, respectively, during Thursday’s session. Club take: “What this does is cement Nvidia as being the company that has, basically, a soup-to-nuts offering. You go all the way from the PC to the highest end,” Jim said on Thursday. “We were all talking about Nvidia and China yesterday [Wednesday],” he added, in reference to media reports that the Chinese government was prohibiting firms from using Nvidia’s high-powered AI chips. “Now, we should be talking about Nvidia as being the colossus.” AAPL YTD mountain Apple YTD Apple’s newest iPhones hit the shelves on Friday as customers around the world lined up to buy its flagship devices. The tech company rolled out iPhone 17s and 17 Pros, and the brand new iPhone Air, along with its more recent iterations of AirPods and Apple Watch models. At the same time, JPMorgan on Friday raised its price target to $280 per share from $255, as analysts cited favorable demand indications in the first days of the launch. The stock jumped more than 3.2% Friday as a result. Club take: Jim sent a clear message to Wall Street Friday after the iPhone launch and the positive call from analysts: Get more bullish on Apple stock. Not only have there been solid early signs of new iPhone demand, but CEO Tim Cook himself shared upbeat remarks with Jim about Apple’s newest devices, too. “It’s a race. It’s a race to be higher,” Jim said about the analyst community. “Those thinking that this will be a so-so launch. The numbers are not saying [that]. The numbers are saying that it’s better.” The new iPhone models, Jim said, are great bargains because customers can combine trade-in value with incentives from cell providers like Verizon . “You want to stay long on this [stock]. This could be the breakout moment,” Jim stressed. “The reason that I say this is because people are looking for low single digits for this. I think we’re going to get better than that.” (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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