This week was all about rotation. Investors spent much of the week shifting funds around, locking in profits with winners — mainly megacap tech stocks — and taking positions in many overlooked areas of the market that are due for a bounce, especially once the Federal Reserve starts cutting interest rates. The result: The Nasdaq shed more than 3%, ending its winning streak of six weeks, and the S & P 500 lost 1.5%. On the flip side, the Dow rose 0.7% higher and the small-cap Russell 2000 increased 2%. With a growing expectation on Wall Street that Donald Trump will win a second presidency — Trump on Thursday accepted the nomination at the Republican National Convention — we spent much of our July monthly meeting identifying the stocks that could work under a GOP administration, along with those that will be challenged. As Jim Cramer said, it wasn’t easy . The market hates uncertainty more than just about anything else, and Trump thrives on surprises. Exhibit A: Donald Trump’s comments to Bloomberg Businessweek raised questions about his support for the longtime U.S. ally Taiwan should he be elected in November. This dragged down Taiwan’s TSMC , the world’s largest contract chipmaker, along with the broader semiconductor sector. Meanwhile, on the other side of the political divide, questions about President Joe Biden’s ability to beat Trump and serve another four years remained front and center. Many prominent Democrats are now calling for Biden to step aside and clear the way for another nominee. Biden’s camp has insisted he’s staying in the race. We’re in wait-and-see mode, but the sooner that uncertainty is taken care, the better for the market. Another thing we’re in wait-and-see mode on: Activist firm Elliott Management has amassed a sizable stake in troubled Club name Starbucks, The Wall Street Journal reported . The story, which cites people familiar with the matter, doesn’t have a ton of detail about what Elliott is pushing for. But in general, this is the kind of development we’ve hoped to see ever since Starbucks’ massive earnings miss April 30. In fact, in a May 5 column , Jim Cramer described Elliott as the “obvious contender” to push for positive changes at the company. We’ll take the nearly 7% pop in shares Friday and hope it’s only the beginning of recovery for the beaten-up stock. Looking under the hood of the S & P 500, the energy sector led to the upside, followed by real estate and financials. Technology led to the downside, followed by communication services and consumer discretionary. Next week we get a few key economic updates, but earnings will drive most of the action as we head into the heart of the second-quarter reporting season. 1. Fed’s fave inflation measure : The personal spending and income report will be the most closely watched economic report next week. Inside the report is the core PCE price index, the Fed’s preferred gauge of inflation. The reading will therefore help determine the Fed’s next move on interest rates. It will also provide details about the health of the consumer, and — since private consumption accounts for roughly two-thirds of U.S. gross domestic product — the health of the economy. As of Friday, economists are expecting to see a 2.5% year-over-year increase at the core level of the PCE price index, according to FactSet. 2. GDP: Speaking of GDP, we’ll get our first read on second-quarter GDP on Thursday. As always with backward-looking reports, a grain of salt is warranted. But it does still provide insight into how the economy held up in the second quarter, which ultimately figures into the future path of interest rates. Current FactSet estimates point to the U.S. economy having grown at an 1.9% seasonally adjusted annualized rate in the April-to-June period. 3. Housing : We’ll get two looks at the state of the housing market – a key source of sticky inflation – with the June existing home sales report Tuesday followed by the new home sales report for that month Wednesday. 4. Earnings : As the second-quarter earnings season picks up pace, we’ll hear from five Club holdings next week including Google parent Alphabet . Danaher reports Tuesday before the opening bell. Order rates, along with the company’s book-to-bill ratio in the quarter, will be important watch items. Investors continue to look for signs that the pressure in bioprocessing demand is easing as funding comes back online and customer inventories are flushed out. In Danaher’s last report, orders were up sequentially despite being down on a year-over-year basis. We hope to see that dynamic on display in the second quarter. Order trends in China, in particular, will be of interest. Still, we are bracing for some short-term challenges. Sentiment in the life-sciences group has soured over the past month due to a couple of disappointing updates from peers. That includes a guidance cut from German competitor Sartorius on Thursday. Some of these risks extend to Danaher, but management has been far more conservative with a derisked outlook all year. Plus, Danaher’s book of business is less exposed to some of the more challenged areas. Alphabet is set to report Tuesday after the close. In addition to the reported results, spending on artificial intelligence and management’s efforts to monetize its massive investments in the fast-moving technology will be key topics on the call. Ford reports on Wednesday after the close. Profitability and free cash flow will be important watch items as we are still hopeful that Ford will implement a buyback program similar to that of General Motors . We’ll also be listening for an update on quality issues as warranty costs have been a drag on profit margins and pose reputational risk. Lastly, we know Ford has been focusing on hybrid vehicles, but we would appreciate any update CEO Jim Farley and Co. can provide on their plan to balance capital investments across internal combustion engine, hybrids and electric vehicle offerings. Honeywell and Dover report on Thursday morning. We’re interested to hear more about Honeywell management’s plans to refine and streamline its massive portfolio. Demand for short-cycle businesses — which tend to be higher margin and are likely to influence management delivers full-year results at the low or high end of guidance — will also be key for the stock. For Dover, we want to see sustained benefit from investments to upgrade and build out accelerated data centers for generative AI. Dover’s Colder Products Company subsidiary makes thermal connectors used in the liquid cooling of data centers and is a key ecosystem partner of Nvidia’s AI factories. Outside of AI, demand for heat exchangers, CO2 systems and biopharma components will round out the results. An improvement in short-cycle end market demand also stands to help Dover’s order rates. Monday, July 22 Before the bell: Verizon (VZ), Truist (TFC), IQVIA (IQV) After the bell: Cleveland-Cliffs (CLF), Nucor (NUE), SAP SE (SAP), NXP Semiconductors N.V. (NXPI), Crown Holdings (CCK), Cadence Design Systems (CDNS), Medpace Holdings (MEDP), AGNC Investment (AGNC), Alexandria Real Estate Equities (ARE), Zions Bancorporation (ZION), Logitech International S.A. (LOGI), Agilysys (AGYS), BOK Financial (BOKF), Brown & Brown (BRO), KKR Real Estate Finance Trust (KREF), W.R. Berkley Corp (WRB) Tuesday, July 23 10:00 a.m. ET: Existing Home Sales Before the bell: Danaher (DHR) , Spotify Technology S.A. (SPOT), United Parcel Service (UPS), GE Aerospace (GE), General Motors (GM), Coca-Cola Company (KO), Freeport-McMoRan Copper & Gold (FCX), Lockheed Martin (LMT), Comcast (CMCSA), Polaris Industries, (PII), Philip Morris International (PM), Kimberly-Clark (KMB), Genuine Parts Company (GPC), HCA Healthcare (HCA), Moody’s Corporation (MCO) After the bell: Alphabet (GOOGL) , Tesla (TSLA), Enphase Energy (ENPH), Visa (V), Texas Instruments Incorporated (TXN), Chubb Corporation (CB), Capital One Financial (COF), Seagate Technology plc (STX), Cal-Maine Foods (CALM), Packaging Corporation of America (PKG), Weatherford International plc (WFRD), Canadian National Railway Company (CNI), FTAI Aviation Ltd. (FTAI), Mattel (MAT) Wednesday, July 24 10:00 a.m. ET: New Home Sales Before the bell: Vertiv Holdings Co (VRT), AT & T (T), Lamb Weston Holdings (LW), Amphenol (APH), NextEra Energy (NEE), Tenet Healthcare (THC), Thermo Fisher Scientific (TMO), GE Vernova (GEV), Boston Scientific Corporation (BSX), General Dynamics (GD), Lennox International (LII), Check Point Software Technologies (CHKP), CME Group (CME), Fiserv (FI), Fortive Corporation (FTV), International Paper Co. (IP), Roper Technologies (ROP), Teck Resources Limited (TECK), Blackstone Mortgage Trust (BXMT), Flex (FLEX), Fomento Economico Mexicano S.A. (FMX), Old Dominion Freight Line (ODFL), Otis Worldwide Corporation (OTIS) After the bell: Ford Motor Company (F) , Chipotle Mexican Grill (CMG), ServiceNow (NOW), International Business Machines (IBM), Viking Therapeutics (VKTX), Las Vegas Sands Corp (LVS), Newmont Mining (NEM), Celestica (CLS), Whirlpool (WHR), Edwards Lifesciences (EW), Globe Life (GL), WM (WM), Align Technology (ALGN), O’Reilly Automotive (ORLY), Annaly Capital Management (NLY) Thursday, July 25 8:30 a.m. ET: Initial Jobless Claims 8:30 a.m. ET: Gross Domestic Price Index Before the bell: Honeywell International (HON) , Dover (DOV) , American Airlines Group (AAL), AbbVie (ABBV), Hasbro (HAS), Southwest Airlines Co. (LUV), New York Community Bancorp (NYCB), RTX Corporation (RTX), AstraZeneca (AZN), Keurig Dr Pepper (KDP), Carrier Global Corporation (CARR), Integer Holdings Corporation (ITGR), Valero Energy (VLO) After the bell: DexCom (DXCM), Skechers (SKX), Texas Roadhouse (TXRH), Deckers Brands (DECK), Juniper Networks (JNPR), Boston Beer Company (SAM), LendingTree (TREE), AppFolio (APPF), Physicians Realty Trust (DOC), Allison Transmission Holdings (ALSN), Associated Banc-Corp (ASB), Baker Hughes (BKR), Columbia Banking System (COLB), Coursera (COUR), Digital Realty Trust (DLR), Edison International (EIX) Friday, July 26 8:30 a.m. ET: Personal Spending & Income Before the bell: Bristol-Myers Squibb (BMY), Charter Communications (CHTR), 3M Company (MMM), Booz Allen Hamilton (BAH), Saia (SAIA), Centene Corporation (CNC), AON Plc (AON), Avantor (AVTR), Barnes Group (B), Colgate-Palmolive (CL) (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber 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 trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
U.S. President Donald Trump speaks on Day 4 of the Republican National Convention (RNC), at the Fiserv Forum in Milwaukee, Wisconsin, U.S., July 18, 2024.
Jeenah Moon | Reuters
This week was all about rotation. Investors spent much of the week shifting funds around, locking in profits with winners — mainly megacap tech stocks — and taking positions in many overlooked areas of the market that are due for a bounce, especially once the Federal Reserve starts cutting interest rates.