A tricky earnings season has required two hands on the wheel, and it's not slowing down yet

CNBC

2 days ago

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets: Stocks are closing out the week in record territory thanks to five straight positive sessions for the S & P 500 . There are no major headlines driving the market other than President Donald Trump teasing more trade deals ahead of the Aug. 1 deadline for higher tariffs kicking in and perhaps some relief around the "more cordial than expected" tour of the Federal Reserve construction project with Jerome Powell on Thursday. Earnings rewind: This is shaping up to be one tricky earnings season. It all started with the financials, where we saw pullbacks of at least 5% in stocks like Wells Fargo and BlackRock despite upbeat results and forward commentary. Those sellers must be living with regret because both have fully recovered and hit new all-time highs on Friday. The takeaway: The first day's reaction was wrong. This week hasn't gone smoothly either. Sure, we had a big hit on GE Vernova , but Honeywell and Dover both sold off aggressively despite beating and raising. Plus, Capital One Financial has curiously pulled back about 10% from its post-earnings intraday record high on Wednesday. Time will tell, but we think these are more examples of good earnings reports getting misjudged by the market. Even Danaher traded in the $170s per share immediately after its results came out, and now it's back above $200. But when it comes to the portfolio, we often say, "He who defends everything defends nothing." That means that not every dip and pullback reflects a buying opportunity. We must apply rigor and analyze every stock and earnings report on a case-by-case basis. For example, we trimmed our position in Abbott Laboratories earlier this week because the company lowered its growth outlook for the year. The lesson here in these busy earnings weeks is that there are so many headlines flying around — and so many reports to digest — that it's hard for the market to keep up. But if we do the work and listen to the earnings calls, we should be able to figure out where the opportunities are. Next week: A huge week and test for the markets is upon us. Roughly 150 companies in the S & P 500 are scheduled to report earnings, including four of the world's biggest companies. We'll have to see if Club names Meta Platforms , Microsoft , and Amazon can keep the ball rolling like Google parent Alphabet did this week and report better-than-expected results and raise their capital expenditure forecast to add support to the AI infrastructure trade. Also in the portfolio, Starbucks , Bristol-Myers Squibb , Apple and Linde are also scheduled to report. On the data side, it's jobs week, which means on Friday we'll see the July nonfarm payroll report. Before that, there's a Fed meeting announcement on Wednesday and rates are widely expected to remain unchanged. But could Fed Chair Jerome Powell hint at the possibility of rate cuts later this year? That's the big question. And throughout the week, we'll be closely monitoring all trade deal headlines ahead of the Aug. 1 tariff deadline. (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.