Stocks jump despite shutdown; we bought more of our newest stocks
Day three of the federal government shutdown came and went Friday, with no end in sight. The stock market saw more all-time highs before the rally ran out of steam. The S & P 500 on Friday eked out a fractional gain for its 29th record-high close since the market’s tariff lows in early April. The Nasdaq fell modestly Friday. The record close on Thursday was the Nasdaq’s 30th since early April. They both logged four positive weeks out of the past five, getting the new month off to a solid start after strong September and third-quarter performances. Jim Cramer said on Tuesday, hours before federal funding ran out, that a government shutdown is a non-event. “I don’t want anyone to sweat it,” he added. The market came to the same conclusion. .SPX YTD mountain S & P 500 (SPX) year-to-date performance The best portfolio stocks for the week were health-related: Shares of life sciences firm Danaher surged more than 16% and drugmaker Eli Lilly jumped nearly 16%. The relief rally in this recently struggling sector came after President Donald Trump’s deal to exempt Pfizer from pharmaceutical tariffs in exchange for the company’s commitment to sell drugs for less and invest more to bring manufacturing back to the United States. Healthcare was the strongest for the week among the S & P 500’s 11 sectors. Utilities and information technology were No. 2 and No. 3 this week as the artificial intelligence trade continued to work. Utilities got a boost because of the power needed to run AI data centers. Tech jumped as Club stock Nvidia soared to record highs Thursday. It was modestly lower Friday. Utilities also rose as power provider AES surged on a report that BlackRock’s Global Infrastructure Partners was in talks to buy it for $38 billion. GIP, the infrastructure fund manager that BlackRock acquired last year, was also said to be in talks to purchase Aligned Data Centers for around $40 billion. Shares of BlackRock ended flat Friday and just under Tuesday’s record-high close. NKE YTD mountain Nike YTD Nike stock advanced after posting quarterly earnings Tuesday evening that far exceeded Wall Street’s expectations. The results showed investors that CEO Elliott Hill’s turnaround strategy has made progress. Nike previously forecasted that revenue would fall by mid-single-digits on a percentage basis this quarter —but instead, revenue increased by 1%. “Turnarounds require management credibility, and the best way to create that is by beating the guidance you give the Street,” Jeff Marks, director of portfolio analysis for the Club, wrote in his earnings analysis. “Nike’s results were far better than the guidance that executives offered three months ago.” Management’s efforts to fix Nike’s structural issues are a key reason why the Club initiated its position last week. On Wednesday, we bought more shares after the earnings report highlighted further signs of improvement. We started a Nike position on Sept. 26. BMY YTD mountain Bristol Myers Squibb YTD On Wednesday, we also took some Bristol Myers Squibb off the table to raise cash for better opportunities down the line. Shares jumped earlier this week amid the aforementioned relief rally in large-cap drug names on the Trump-Pfizer agreement. While we trimmed into strength, the Club took a loss of roughly 20% on Bristol Myers stock purchased in November 2024. Our long-term view on Bristol Myers depends on a key trial for its schizophrenia drug Cobenfy, which has suffered some setbacks as of late. BA YTD mountain Boeing YTD On Tuesday, we were buyers of Boeing after the stock surprisingly gave up a lot of its gains that were connected to news of easing restrictions from the Federal Aviation Administration last week. We saw the Sept. 26 announcement from the FAA as a win because it allows Boeing to more easily increase production. If Boeing can deliver more planes, its free cash flow should improve. In fact, Bloomberg reported Friday that Boeing’s new 777X widebody jet is now set to make its commercial debut in early 2027 instead of next year. During Friday’s Morning Meeting, Jeff pointed out that CEO Kelly Ortberg said at a conference last month that the 777X program was behind schedule, and the company was working through the financial impact. While far from positive, it was not new information. COST YTD mountain Costco YTD The Club made only a small purchase of additional Costco shares on Tuesday. It’s a high-quality company whose stock has been in a rough patch. The pullback presented an opportunity, given Costco’s consistent market share gains and durable growth story. While Costco’s quarterly earnings failed to impress us last week, we were glad to see membership growth and gross margin expansion. Wall Street analysts also made big calls on some of our stocks this week — downgrading Wells Fargo, GE Vernova , and Apple . The bearish commentary began Monday with Morgan Stanley, which lowered its rating on Wells Fargo to a hold from an overweight buy. The analysts cited a lack of near-term catalysts — since the Federal Reserve, over the summer, lifted its $1.95 trillion asset cap on Wells. “We were [overweight] Wells heading into the asset cap removal, viewing it as an underappreciated catalyst for faster EPS growth,” Morgan Stanley said. “We see more limited upside from here relative to our [overweight] rated stocks.” The analysts also said Wells would not “be a beneficiary” of the Fed interest rate cuts, meaning less upside for its net interest income (NII) streams. Morgan Stanley’s call didn’t change our conviction on Wells stock, though. We maintained our hold-equivalent 2 rating. What the analysts failed to see is that the Wells’ profits aren’t as reliant on central bank monetary policy moves as they once were. Basically, Wells has more to offer than just its NII. Fee-based revenues from investment banking and wealth management are slowly becoming a bigger part of the bottom line. Two sessions later, RBC Capital Markets issued a downgrade of GE Vernova stock to a hold from a buy. The analysts cut their price target on shares to $605 from $631. RBC cited challenges in GE Vernova’s wind turbine business and concerns about the stock’s valuation. As companies need more power to meet the demand from increased data center construction, more business will come to GE Vernova, “I didn’t understand this downgrade at all,” Jim said during Wednesday’s Morning Meeting. “I like how they are positioned.” Apple on Friday was downgraded by Jefferies to an underperform sell from a hold. The investment firm said that demand for Apple’s latest iPhone 17 and Air models has already been priced into shares, and that expectations for a foldable iPhone 18 next year have become too excessive. Members, however, should tune out the Jefferies note for two reasons. First, Jefferies has changed its rating on Apple five times since the start of the year. Although each downgrade and upgrade had been well-timed, it’s much more difficult for everyday investors to time these kinds of trades. “When you see this kind of trading, it is exactly antithetical of everything I’ve stated,” Jim said Friday morning. “This is what kills you [performance-wise]. You cannot sell, hold, sell, hold, sell, hold [as an] individual.” Second, we think Apple has more up its sleeve when it comes to innovation for its iPhones. The company is not often the first to market with consumer devices, but it has historically offered the best quality. (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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