Wall Street ended higher in the holiday-shortened trading week, led by technology stocks. The Dow Jones Industrial Average rose less than 1% for the week. The S&P 500 and Nasdaq both closed at record highs on Friday, rising nearly 2% and 3.5% respectively for the week. The first week of July continued the strong momentum seen in June, the second quarter and the first half of 2024. Consumer discretionary and communications services (represented by club names Meta Platforms and Alphabet) also performed strongly. The energy sector led losses this week, followed by health care and industrials. Looking back at the week, we got some noteworthy economic updates and heard the news about the club taking a controlling stake in Constellation Brands thanks to the early close on Wednesday and Thursday. The maker of Corona and Modelo brewers reported solid quarterly results on Wednesday, sending shares higher on the news. We told our members that we took profits on Constellation shortly before the market opened. However, the troubled wine and spirits business remains an issue that management must address in the coming quarters. Shares closed down more than 3% on Wednesday, but had recovered most of those losses by Friday’s close in a relatively uneventful week. Falling bond yields drove stocks sharply higher on Friday as the unemployment rate rose to 4.1% in June and nonfarm payrolls came in just above expectations of 206,000. Wage inflation was in line with expectations. Overall, the government’s monthly jobs report supported the Fed’s case for a rate cut at its September meeting. Although the market expects a second rate cut in December, the Fed is expected to cut interest rates only once this year after its June meeting. Last week also brought the latest news from the manufacturing industry. On Monday, the ISM manufacturing purchasing managers’ index for June was weaker than expected and contracted faster than expected; on Wednesday, factory orders in May showed a monthly decline, while a slight increase was expected. The ISM Services PMI for June released on Wednesday also disappointed as it showed a contraction in the services sector. Economists have been expecting the economy to expand. These data also give the Federal Reserve the green light to start cutting interest rates. We hope everyone had a great 4th of July and had a relaxing weekend. You’re going to want to take advantage of this quiet time because, believe it or not, earnings season is back. Three of the four major money center banks are due to release reports on Friday, including club name Wells Fargo. The government also provides key data on consumer and wholesale inflation. Economic data: The Consumer Price Index (CPI) for June will be released on Thursday morning, and the Producer Price Index (PPI) for June will be released on Friday morning. Of the two, the CPI carries more weight because it is a better proxy for what consumers pay for a basket of goods from one year or one month to the next, which is the Fed’s main concern. However, tracking PPI is important because it tells us what is happening at the level of a business’s cost inputs. This illustrates profit dynamics – and therefore, it can tell us about profitability and potential price action the company may need to take in the future to protect profitability. In the consumer price index data, be sure to pay attention to the housing component, which has been a major thorn in the Fed’s side. Housing, a barometer of people’s housing costs, has proven to be a very troublesome source of inflation — a problem because it represents a huge and unavoidable cost for most Americans. Economists expected headline CPI to grow at an annual rate of 3.1%, according to FactSet data as of Friday. Core CPI, which excludes food and energy prices, is expected to increase by 3.5% annually. If implemented, this would mean a slight slowdown at the overall level, but a slight speedup at the core level. As for PPI, economists expect the overall level to increase by 2.3% annually and the core level to increase by 2.5% annually. These numbers will be slightly higher than what we saw in May. Earnings Season: Net interest income (NII) guidance across the portfolio will be a key item to watch when Wells Fargo reports its quarterly report this Friday. At an industry conference on Tuesday, Chief Financial Officer Michael Santomassimo reiterated guidance for a year-over-year NII decline of 7% to 9%. We still think this outlook is likely conservative, as the Fed’s longer-term higher policy is typically a driver of net interest income. However, other factors, including weak loan demand, have prevented Wells Fargo from raising its outlook this year. We were aware of the recent strong share price gains in Wells Fargo and fellow club bank Morgan Stanley, and we took profits last Friday. Morgan Stanley will report earnings on Tuesday, July 16th. The names Morgan Stanley all passed the audit, which shows that they have a strong capital position with excess funds to return to shareholders. Other higher-level watch items in the Wells Fargo report include commentary on the state of consumer savings, an indication of further buying power, and the real estate market, which has been something we’ve been monitoring as the world finds a new normal post -Severe Special Infectious Pneumonia. No major events Monday, July 8 No major events Tuesday, July 9 No major events Wednesday, July 10 Thursday, July 11 8:30 a.m. ET: Consumer Price Index ET 8:30 a.m.: Initial jobless claims pre-market gains: PepsiCo ( PEP ), Delta Air Lines ( DAL ), ConAgra Brands ( CAG ) Friday, July 12, 8:30 a.m. ET: Producer Price Index pre-market : Wells Fargo (WFC), JPMorgan Chase (JPM), Citigroup (C) (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to the CNBC Jim Cramer Investment Club, you’ll trade on Jim Receive transaction alerts before. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. 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On July 4, 2024, Independence Day in New York, the United States, the American flag was hoisted on the New York Stock Exchange building.
Beata Zaouzel | Photos of Beata Zaouzernur | Getty Images
Wall Street ended higher in the holiday-shortened trading week, led by technology stocks.
