Every weekday, the CNBC Investing Club with Jim Cramer provides a timely update known as the Homestretch, designed to inform investors just before the final hour of trading on Wall Street.
The stock market has started the week on a high note, with all three major indices—the Dow, the S&P 500, and the Nasdaq—reaching new all-time intraday highs. This upward momentum is largely attributed to eased trade tensions between the United States and China, as both nations have agreed on a framework to potentially avoid increased tariffs. In addition to this diplomatic progress, a wave of mergers and acquisitions across various sectors and the anticipation of a 25-basis-point interest rate cut by the Federal Reserve are contributing to the positive sentiment on Wall Street.
However, market watchers are also cautious as the S&P Short Range Oscillator has firmly entered overbought territory. Jim Cramer, who has relied on this Oscillator for decades to gauge momentum swings, indicates that in such overbought conditions, it may be prudent to consider selling some positions to bolster cash reserves. In line with this strategy, the investing club reduced its stake in Danaher earlier in the day.
In terms of retail earnings, JPMorgan’s analyst of department stores and specialty softline retail, Matt Boss, shared a positive outlook for the sector as it approaches earnings season. His analysis, based on proprietary Chase Credit Card data, reveals that total U.S. spending growth has picked up, particularly driven by higher-income consumers. Additionally, Boss suggests that the retail group benefitted from a robust start in August, aided by the Back-to-School season and unseasonably cool weather. Notably, many retail management teams had set conservative expectations last earnings season, anticipating a downturn in consumer spending that has yet to materialize.
Through diligent store visits and management meetings, Boss has maintained a favorable stance on off-price retailers, singling out TJX as a standout. Ahead of the quarterly reports, he raised TJX’s price target by $1 to $150 and held onto his overweight buy rating. Recent checks revealed that TJX stores feature significant inventory from well-known brands at deeply discounted prices, often around 70% off. This ability to source high-quality merchandise at bargain rates is crucial for TJX shareholders.
Looking ahead, investors brace for the largest week of third-quarter earnings season, with several major companies set to report their quarterly results after the closing bell. Among those expected to announce are Nucor, Whirlpool, and Cadence Design Systems. New portfolio addition Corning will report prior to Tuesday’s market open, alongside several other notable firms such as UnitedHealth and PayPal.
On the data front, the Conference Board is expected to release its latest consumer confidence reading, providing further insights into economic conditions. Subscribers to the CNBC Investing Club with Jim Cramer are reminded that trade alerts will precede any trades made by Jim, with specific time frames dictating when those trades can be executed based on prior discussions on CNBC TV.
Investors are encouraged to remain attentive and cautious, as market dynamics can shift based on the myriad factors influencing economic conditions and corporate performance.
