The Homestretch is an afternoon update provided by the CNBC Investing Club with Jim Cramer, released every weekday just in time for the last hour of trading on Wall Street. The latest market check indicates that stocks are trending lower on Friday, following a positive week for the S & P 500 and Nasdaq as they closed at new record highs. However, most of the gains have been concentrated in stocks generating revenue from artificial intelligence, leading to a significant divergence in returns this week. The tech sector rallied more than 6%, driven by major moves in companies like Broadcom, Nvidia, Apple, and Microsoft, all of which have market caps exceeding $3.2 trillion. Conversely, the energy, financials, and industrials sectors all dropped by more than 1% due to concerns about slowing economic growth.
In light of this divergence in returns, a debate arises about whether market leaders will fall back to the rest of the market or if laggards will catch up as part of a broadening rally. The CNBC Investing Club emphasizes the importance of discipline over conviction after a significant move, which is why they have decided to trim their positions in certain stocks while also putting some cash to work in others. For example, they plan to take profits in Broadcom and have already trimmed Palo Alto Networks, as both companies have seen significant gains recently. Additionally, they have invested in DuPont, which has shown less than 2% growth since announcing a value-creating plan to split into three separate entities.
The Dow Jones Industrial Average is lagging behind this week due to the dominance of the AI trade and the price-weighted nature of the stock gauge. Most Club-owned Dow names have been laggards, with only Apple and Microsoft showing strong performance. Amazon, Salesforce, Honeywell, Procter & Gamble, and Disney have all been underwhelming this week. Looking ahead, there is a holiday-shortened trading week coming up, with the New York Stock Exchange closed on Wednesday for Juneteenth. The economic and earnings calendar is light, with May retail sales and housing releases on the horizon.
Subscribers to the CNBC Investing Club with Jim Cramer receive trade alerts before Jim makes a trade, allowing for a 45-minute waiting period before buying or selling a stock in the portfolio. If Jim discusses a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. It is important to note that the information provided by the Investing Club is subject to terms and conditions, privacy policy, and disclaimer. There is no fiduciary obligation created by receiving information from the club, and no specific outcome or profit is guaranteed.
