The stock market has once again set records this week, buoyed by the Federal Reserve’s recent decision to cut interest rates for the first time since last December. Both the S&P 500 and Nasdaq composite indexes have achieved all-time high closing figures, with the most recent peak occurring on Friday following the Fed’s announcement of a quarter-point reduction to the overnight lending rate.
This strategic move by central bankers has positioned the benchmark funds rate in a range of 4% to 4.25%, with indicators suggesting the possibility of two additional cuts in 2025. Initial market reactions to the rate cut were mixed, fluctuating both upward and downward, but sentiment ultimately turned positive as investors embraced the anticipated easing of monetary policy in subsequent trading sessions. Over the week, the S&P 500 and tech-centric Nasdaq gained approximately 1.2% and 2.2%, respectively.
During Thursday’s Monthly Meeting, financial commentator Jim Cramer noted that the Fed rate cut creates a sense of optimism, at least until the upcoming employment report scheduled for October 3 and the anticipated earnings season that begins in three weeks. He pointed out that the market’s attention would soon shift towards the Fed’s next meeting in late October, describing this as a potential source of “tremendous trepidation,” particularly regarding tariffs and growing costs. Cramer indicated an expectation of persistent inflationary pressures, suggesting that the Fed will be cautious about further rate cuts in such an economic environment.
In conjunction with the market’s upswing, two significant trades were executed by the investing Club this week. On Monday, profits were taken on Broadcom shares, which had appreciated significantly, leading to their status as the largest position in the portfolio at over 5%. This sale was not indicative of a diminished faith in Broadcom, with expectations that the company will continue to benefit from robust artificial intelligence-driven revenue growth, particularly after realizing gains of about 88% on shares purchased in September 2023. On Friday, additional shares of Boeing were acquired as the stock was down roughly 10% from recent highs, providing a favorable opportunity to build on the investment based on the company’s ongoing order growth and promising balance sheet improvements.
Among the stocks capturing significant attention this week were CrowdStrike, Nvidia, and Apple. CrowdStrike shares surged over 12% following an investor day where CEO George Kurtz outlined ambitious long-term financial goals, including expected annual recurring revenue of $20 billion by fiscal year 2036, representing a 15% compound annual growth rate. Cramer praised CrowdStrike as an illustrative example of a desirable investment, acknowledging, however, that the stock price reflects its growth prospects and market leadership.
Nvidia also made headlines with a surprising announcement of a partnership with Intel, including a $5 billion investment in Intel stock. This collaboration is set to enhance both companies’ offerings in artificial intelligence systems for data centers, with Nvidia’s graphics processors and Intel’s central processing units poised to create a robust integrated solution. Following the news, Nvidia and Intel stocks jumped approximately 3.5% and 23%, respectively.
Apple launched its latest iPhones, the 17 and 17 Pro models, alongside the iPhone Air, prompting long lines of eager customers. This release coincided with an upward revision of the company’s stock price target by JPMorgan, which updated it to $280 per share from $255, spurred by early indications of strong demand. As a result, Apple shares rose over 3.2% on Friday. Cramer emphasized the need for Wall Street to become more bullish on Apple, highlighting the early positive indicators and CEO Tim Cook’s optimistic remarks about the product lineup. He described the new iPhone models as appealing bargains, particularly due to trade-in incentives, emphasizing a favorable outlook for the stock in the near term.
The market’s current trajectory, combined with these corporate developments, suggests a dynamic investment landscape as stakeholders remain attentive to forthcoming economic data and corporate earnings reports.
