What caused the market's volatile week – plus, 7 stocks we traded

Stocks rebounded on Friday, but not enough to make up for losses earlier in the week. All three major averages posted gains after New York Fed President John Williams said in December that a rate cut was still on the table; The Dow Jones Industrial Average and S&P 500 each gained about 1%, while the Nasdaq Composite gained 0.9%. He argued that labor market weakness poses a greater threat to the country's economy than high inflation. Expectations for a rate cut next month have increased: On Friday, the market was pricing in a 25 basis point cut next month with about a 71% chance, according to the CME FedWatch Tool. This was a big reversal from the day before, when the odds were only 39%. Indeed, investor confidence was low on Thursday following the delayed release of the September jobs report, clouding the picture for any further cuts this year. Investors also remained concerned about the valuations of AI-related companies and their big spending on data centers. Despite Friday's moves, the three major averages still posted large losses this week. The S&P 500 and the 30-stock Dow index finished down nearly 2%; Nasdaq lost 2.7%. .SPX YTD mountain S&P 500 (SPX) year-to-date performance Earnings Nvidia's quarterly earnings report also stirred the market. Wall Street always keeps a close eye on the company's exit, as many view the chipmaker as an indicator for the health of the AI business and the overall market. Nvidia posted stellar results on Wednesday evening, beating the Street's top and bottom line forecasts. Management also raised its current quarter sales forecast. Club raised its price target to $230 from $225 and maintained a 2-equivalent rating on the stock. Shortly thereafter, the stock market experienced a dizzying rise until Thursday morning, boosting the ancillary play of megacap technology and artificial intelligence. However, the recovery faded in the afternoon. Other wins we tracked came from these Club names: Home Depot, Palo Alto Networks, and TJX Companies. Home Depot reported a quarterly earnings loss on Tuesday, and management lowered the company's full-year outlook. Shares fell after another weak quarterly report from the home improvement retailer. We still think this is one of the better ways to play with falling odds. As a result, the Club purchased additional Home Depot shares shortly after the launch. We lowered our price target from $440 to $420 to reflect management's current forecast. On Wednesday morning, TJX Companies broke down the top and bottom lines for the quarter. In fact, the low-price retailer delivered better-than-expected results in each of its four operating segments for the third quarter in a row. According to the results, retail stock fell, but we found that this decline was driven by profit rather than a fundamental issue. After all, TJX was a bright spot in a laggard retail industry. Club raised its price target on TJX to $160 from $150 and maintained a buy-equivalent 1 rating on the shares. Palo Alto Networks had a hit-and-raise quarter on Wednesday evening. The cybersecurity leader topped estimates in key metrics such as next-gen annual recurring revenue (ARR); This is important for Palo Alto because it can highlight the success of the management's "platformization" strategy to bring together its products and services. The company's decision to acquire cloud management and monitoring platform Chronosphere was also excellent. The deal, valued at around $3.35 billion, could make Wall Street analysts more optimistic about the cyber stock, given Chronosphere's solid ARR growth. Portfolio movements Home Depot wasn't the only trade we made this week. We did six more, including the launch of a new stock. We also added two names to the Bullpen. Consumer packaged goods giant Kimberly-Clark and pharmaceutical maker Johnson & Johnson were added to the Bullpen on Monday as the club looks for opportunities outside the AI business. In the Kimberly-Clark case, its stock has been unfairly penalized since the company announced its plan to acquire Tylenol maker Kenvue a few weeks ago. But there's a lot to like about the deal. Once Kenvue was under Kimberly-Clark's control, the combined company would have ten different $1 billion brands. It will also be the second largest consumer packaged goods company in the world. At Johnson & Johnson, we like the stock in part because of its strong oncology portfolio. A day later, the Club cut its Disney position in half following a disappointing earnings report in early November. We have realized a return of approximately 3% on shares purchased between 2022 and 2023. "The company is in a much better position today than it was three years ago, with an improved balance sheet and cost profile. But it has not been able to offset persistent declines in its linear networks business as quickly as we had hoped," we said in our trading alert. We completely moved out of our Disney location on Wednesday. We sold Eli Lilly shares on Tuesday and received a 330% gain on a 2022 purchase. The Club raised its price target on Eli Lilly to $1,100 per share from $925 and lowered it to a hold equivalent rating of 2. Shares hit an all-time high on Friday, pushing the market cap past $1 trillion. Lilly is now the first pharmaceutical company to achieve this. We took the money from the sale of Lilly, along with the Disney settlement earlier this month, and initiated a new position in Procter & Gamble. This may have come as a surprise to members, as we added a different consumer packaged goods name, Kimberly-Clark, to Bullpen earlier this week. But we think Procter & Gamble is better managed now. “Procter & Gamble has one of the strongest growth records in its category,” we said in our trade alert. “The powerhouse behind consumer staples brands like Tide, Crest and Gillette saw its latest earnings results mark its 40th consecutive quarter of organic sales growth, putting the company on track for its 10th consecutive year of core earnings per share growth.” In addition to our Disney debut on Wednesday, the Club purchased more shares of DuPont spinoff Qnity Electronics. We saw the stock's decline throughout the month as an opportunity to expand our position. We love Qnity for its contribution to the growth of the semiconductor industry. Finally, the Club purchased more Corning stock on Thursday amid a broad selloff in the market. "Our discipline is to always look for high-quality companies to buy when the market is oversold, so we're holding our nose and nibbling on shares of Corning, a leader in fiber optic cables, on this weakness," we said in our trading alert. (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.