Stocks keep the rally going and oil tumbles. Here’s why we have some trepidation
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Markets are rising for the second session in a row. The S&P 500 extends this week’s gains to over 2%. The tech-heavy Nasdaq 100 is performing even better. The index, which hosts the 100 largest non-financial companies on the Nasdaq stock exchange, continues its 10-session winning streak with an increase of approximately 12%. The Nasdaq 100 hasn’t posted this many consecutive gains since 2021, which gives us some pause on what could be a short-term pullback. Taking into account the size of the move, the length of the winning streak, and the S&P Oscillator’s plus 7% overbought reading, we are looking for areas we can correct rather than putting new money into the business. That’s why we had a small Boeing sale this afternoon. U.S. oil prices fell nearly 7% during the session as media outlets including CNBC reported that Washington and Tehran were in talks for a second round of peace talks. WTI crude oil is currently trading just under $92 a barrel, marking its lowest level since the two sides agreed to a two-week ceasefire on April 7. Unsurprisingly, the energy sector was the worst performing sector of the day, and the State Street Energy Select ETF (XLE) has now erased all of its gains from the Iran war. The decline in oil coincides with the decline in interest rates. The yield of the benchmark 10-year Treasury bond decreased to 4.26 percent. The 10-year bond yield, which made its first rise on February 28, when the Iran war began, peaked at almost 4.5% on March 27, a session before the S&P 500 bottomed. Jim Cramer emphasized the importance of low rates to the market’s rise in his column on Sunday and again in his “Crazy Money” piece on Monday night. It’s a big “Magnificent Seven” day in the portfolio. Amazon and Meta Platforms were each up more than 4%, followed by a 3% gain at Alphabet and a 2% gain at Microsoft and Nvidia. Apple is the only red name in the group, despite a decline of less than 1%. As stated, we prefer to be sellers rather than buyers in current market conditions. If we didn’t have commercial restrictions, Amazon is a name we would want to shorten; This is something Jim talked about on Tuesday’s Morning Meeting. No significant gains after the closing bell on Tuesday. We’ll see earnings from Morgan Stanley, Bank of America, ASML and PNC before the opening bell on Wednesday. ASML quarter will be one to watch. This is an important report for those investing in AI infrastructure, as incredibly complex lithography machines are one of the key bottlenecks to increasing chip manufacturing capacity. (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 CAN BE GUARANTEED.
