Here are the things that drove this week’s stock market
The Federal Reserve gave Wall Street a reality check this week, but the S&P 500 refused to give up back-to-back weekly gains. Positive war developments paved the way. The S&P 500 rose 1.1% on Thursday as investors ignored monetary policy concerns from the previous session, leading to a 1.2% decline. Nasdaq’s 1.9 percent gain offset some of the 1.3 percent loss in the previous session. The US and Iran signed a memorandum of understanding to extend the ceasefire and open the Strait of Hormuz, causing oil prices to fall throughout the week, which supported stocks. Chip makers also moved higher. Here’s a closer look at what’s moving Wall Street this week. New era at the Fed So, what caused the big mid-week selling wave that almost turned the market negative? Simply put, investors were spooked by Fed policymakers who predicted a possible interest rate hike to combat stubborn inflation. These signals came after the central bank kept interest rates steady at the end of its two-day June meeting. At a post-meeting press conference Wednesday afternoon, new Governor Kevin Warsh said officials are committed to meeting the Fed’s goal of reducing inflation to 2%. Warsh interrupted the closely watched Fed meeting policy statement and announced a series of task forces that will reshape the institution. The market’s losses intensified during Warsh’s Wednesday press conference and into the close; This marked the S&P 500’s worst performance on its first “Fed day” under a new chair since 1994. Still, shares rebounded a day later and finished the shortened four-session trading week in the green. The S&P 500 rose 0.9%, gaining its 11th week in the last 12. Nasdaq gained 2.4%. The market was closed on Friday for the June holiday. Chip manufacturers are crying. Our chip stocks continued to gain this week. Club, which owns Intel, rose 10.6 percent on Thursday, hitting records after President Donald Trump said Apple would work with the semiconductor company to develop and design chips in the United States. This brought Intel’s weekly gain to 7.6%. Nvidia and Broadcom, the club’s other two chip names, followed suit, rising 2.9% and 4.7% respectively on Thursday. Arm rose almost 5% to an all-time high. Nvidia finished the week up 2.7%, Broadcom up 7.7% and Arm up 15.4%. The iShares Semiconductor ETF (SOXX) is up approximately 7.3% over the period. Jim Cramer has been bullish on Intel lately, and Thursday’s news strengthened his belief. We added it to our position on Tuesday. Intel’s foundry business and its significant role in providing central processing units to data centers are key reasons why we started earlier this month. Jim called Intel his favorite stock during the Club’s June Monthly Meeting on Wednesday. “This is my No. 1 step,” he repeated during Thursday’s Morning Meeting. “It’s not Nvidia anymore.” Of course, the strength in chip stocks hasn’t spread that far into broader technology. Club holdings Microsoft, Amazon, Meta Platforms and Alphabet took some big hits in the Fed speech on Wednesday as investors turned to “safe haven” groups. Except for Microsoft, the rest finished the week with gains. But their weekly earnings pale in comparison to most of our chipmakers. Meta and Amazon were up 1.8% and 2.5% respectively. Google’s parent company Alphabet rose 2.3%. Microsoft, which fell behind the group, lost 2.9% of its value in this period. War on hold (for now) Optimism about the US-Iran war sent stocks soaring earlier in the week after Trump announced that the two countries had agreed to a memorandum of understanding aimed at establishing lasting peace. Follow-up talks were supposed to be held on Friday after both sides signed the MoU. However, these talks did not take place. The agreement gives the United States and Iran 60 days to reach a final peace agreement. We added to our Capital One position as the consumer bank benefits from low oil prices. U.S. crude oil has fallen nearly 10% this week, and the national average for a gallon of unleaded gasoline has fallen below $4. “This week we made a bold move at Capital One, a company that we took from a huge profit to almost nothing in a painful round trip,” Jim said at our June Monthly Meeting. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) When you subscribe 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 trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT GUARANTEE IS MADE.
