Power Check: Cisco, Deere and D.R. Horton
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CNBC
5 hours ago
- CNBC
Why Wall Street kept sending the S&P 500, Nasdaq to fresh records this week
The stock market ended the week higher as Wall Street speculated on how a spate of economic releases would impact the Federal Reserve's next interest rate decision. The S & P 500 and Nasdaq both gained nearly 1% over the past five sessions. Both benchmark gauges hit several record closes this week, with the S & P 500 reaching the milestone on Tuesday, Wednesday, and Thursday. The tech-heavy Nasdaq closed at record highs on Tuesday and Wednesday. Both indexes hit all-time intraday highs on Friday but closed the session modestly lower. Inflation data Stocks were pushed much higher on Tuesday, which carried the week, after the July consumer price index showed inflation had cooled more than expected. This caused Fed rate cut expectations for September to rise. The stock market's run continued into Wednesday's session. On Thursday, however, stocks lost some momentum after July's producer price index indicated that wholesale inflation rose more than expected last month. Despite higher inflation figures, though, the market odds of a rate cut at the Fed's meeting next month didn't decrease by much, according to the CME FedWatch tool. A second Fed rate cut by the end of the year is also expected. Cisco's quarter Our focus was also on quarterly earnings Wednesday evening from Cisco Systems , the latest addition to the Club's portfolio. Cisco beat analysts' expectations for the top and bottom lines during its fiscal 2025 fourth quarter. The company experienced strong revenue growth within its networking business thanks to the boom in AI infrastructure spending. Orders within the networking business surpassed $800 million during the fiscal fourth quarter, bringing the total to more than $2 billion for fiscal 2025. That's double management's goal for the year. Still, shares slipped after the release due to the significant revenue miss in Cisco's security division. That didn't shake our conviction in the stock, though. The Club reiterated our buy equivalent 1 rating , and maintained our price target of $78. "In a market that rewards AI-exposed companies with lofty valuations, Cisco trades at a very reasonable high teens price-to-earnings multiple. That valuation is too cheap to us," Jeff Marks, director of portfolio analysis for the Club, wrote in his earnings analysis. Later in the week, commentary from one Wall Street firm sent Cisco stock lower again. Shares fell 5.5% on Friday after HSBC downgraded the stock to a hold rating from a buy, and lowered its price target to $69 from $73. Analysts viewed Cisco's quarterly report as lackluster and said more stock gains would be hard to come by. "Though the company reported more than USD2bn of AI infrastructure orders in FY25, strength seems to be getting offset by weakness elsewhere," HSBC wrote in a Thursday note to clients. Record highs Although Cisco stock had a tough week, many other portfolio names experienced big runs. In fact, five Club holdings reached record highs since Monday. In no particular order, here's a breakdown of each. Goldman Sachs briefly reached an all-time high Friday of $749.05. But shares then tumbled 2.2% into the close. BlackRock hit a record Wednesday of $1,171.89. The stock drifted lower to around $1,135 by Friday's close. Broadcom on Wednesday touched $317.35, its highest stock price ever. Nvidia shares jumped to a record of $184.48 on Tuesday. Meta Platforms stock climbed to an all-time high of $796.25 on Friday. Portfolio moves We executed three trades last week, including exiting one position entirely. First, we bought more shares of Starbucks and Palo Alto Networks on Monday after unreasonable sell-offs. On Thursday, we sold the rest of our small Coterra Energy position. It no longer made sense to invest in Coterra in the current economic environment. Jim Cramer talked about this at length during the Club's August Monthly Meeting. We didn't just buy and sell, though. The Club changed ratings on two portfolio names as well. A new piece of Wall Street research led us to downgrade Salesforce on Monday to a hold-equivalent 2 rating. Analysts at Melius Research came out with a note that outlined the headwinds that generative AI could have on software-as-a-service companies like Salesforce. Shares then popped nearly 4% on Friday after filings revealed that Jeff Smith's Starboard Value increased its stake in Salesforce by 47% during the second quarter. That renewed bets that activists will push for change again, as they did with success a couple of years ago. After two terrible weeks, the stock finished this week up almost 1%. Two sessions later, the Club double upgraded Eli Lilly shares to a buy-equivalent 1 rating after CEO David Ricks and other company insiders bought a significant amount of the slumping stock. Health-care stocks, which had been struggling as a sector, have gotten a boost over the past week or so. Lilly stock was our best performer this week, jumping 12%. (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.
Yahoo
11 hours ago
- Yahoo
S&P Futures Tick Higher With Focus on U.S. Retail Sales Data and Trump-Putin Meeting
September S&P 500 E-Mini futures (ESU25) are trending up +0.17% this morning, bolstered by continued hopes for a Federal Reserve rate cut next month, while investors await U.S. retail sales data and high-stakes talks between U.S. President Donald Trump and Russia's Vladimir Putin. In yesterday's trading session, Wall Street's major indices closed mixed. Tapestry (TPR) plunged over -15% and was the top percentage loser on the S&P 500 after the fashion-brand company issued below-consensus FY26 EPS guidance. Also, Deere & Company (DE) slumped more than -6% after the agricultural and construction equipment maker cut the upper end of its full-year net income guidance. In addition, Cisco Systems (CSCO) fell over -1% after the computer networking company gave a cautious full-year forecast. On the bullish side, Eli Lilly (LLY) rose over +3% after the drugmaker announced it would raise the list price of its Mounjaro weight-loss treatment in the U.K. by as much as 170%. More News from Barchart UnitedHealth Stock Soars as Warren Buffett's Berkshire Hathaway Discloses $1.57B Stake 1 'Strong Buy' Dividend Stock to Buy to Protect Your Portfolio Lucid Motors Is Caught in a Tariff Trap. Is LCID Stock More Likely to Hit $1 or $7 in 2025? Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Economic data released on Thursday showed that the U.S. producer price index for final demand rose +0.9% m/m and +3.3% y/y in July, much stronger than expectations of +0.2% m/m and +2.5% y/y. Also, the core PPI, which excludes volatile food and energy costs, rose +0.9% m/m and +3.7% y/y in July, stronger than expectations of +0.2% m/m and +2.9% y/y. In addition, the number of Americans filing for initial jobless claims in the past week fell by -3K to 224K, compared with the 225K expected. 'This doesn't slam the door on a September rate cut, but based on the market's initial reaction, the opening may be a little smaller than it was a couple of days ago,' said Chris Larkin at E*Trade from Morgan Stanley. St. Louis Fed President Alberto Musalem said on Thursday that it is still too soon for him to determine whether to support an interest rate cut at next month's meeting. Asked whether a 50 basis point cut could be warranted next month, Musalem said that, in his view, such a move would be 'unsupported by the current state of the economy and the outlook for the economy.' Also, San Francisco Fed President Mary Daly said in an interview with the Wall Street Journal that she is not in favor of a 50 basis point rate cut at the September meeting, saying that 'would send off an urgency signal that I don't feel about the strength of the labor market.' U.S. rate futures have priced in a 92.6% probability of a 25 basis point rate cut and a 7.4% chance of no rate change at the next FOMC meeting in September. Investors await a meeting later today in Alaska between U.S. President Donald Trump and Russian President Vladimir Putin over the war in Ukraine. Trump cautioned there would be 'very harsh consequences' if Putin failed to agree to a ceasefire with Ukraine, while suggesting the possibility of a follow-up meeting that could include Ukraine's President Volodymyr Zelenskyy and some European leaders. Meanwhile, Putin looked to strengthen his relationship with Trump ahead of their summit, commending the U.S. leader's attempts to mediate an end to the war in Ukraine and offering the prospect of economic cooperation along with a new arms control agreement. On the economic data front, all eyes are focused on U.S. Retail Sales data, which is set to be released in a couple of hours. Economists, on average, forecast that Retail Sales will show a +0.6% m/m rise in July, the same as the previous month. Investors will also focus on U.S. Core Retail Sales data, which rose +0.5% m/m in June. Economists expect the July figure to be +0.3% m/m. The University of Michigan's U.S. Consumer Sentiment Index will be closely monitored today. Economists forecast that the preliminary August figure will stand at 61.9, compared to 61.7 in July. U.S. Industrial Production and Manufacturing Production data will be released today. Economists expect Industrial Production to be unchanged m/m and Manufacturing Production to drop -0.1% m/m in July, compared to the June figures of +0.3% m/m and +0.1% m/m, respectively. The Empire State Manufacturing Index will be reported today. Economists foresee the Empire State manufacturing index standing at -1.20 in August, compared to last month's value of 5.50. U.S. Export and Import Price Indexes will be released today as well. Economists anticipate the export price index to rise +0.1% m/m and the import price index to rise +0.1% m/m in July, compared to the previous figures of +0.5% m/m and +0.1% m/m, respectively. In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.289%, down -0.09%. The Euro Stoxx 50 Index is up +0.61% this morning on optimism that the U.S.-Russia summit could serve as a first step toward brokering a peace deal in Ukraine. Mining and chemical stocks outperformed on Friday. The benchmark index is on track to post its second consecutive weekly gain, supported by a largely upbeat domestic earnings season and expectations for monetary easing in the U.S. U.S. President Donald Trump and Russian President Vladimir Putin are set to meet later today in Alaska for their first in-person talks since the start of Russia's full-scale invasion of Ukraine. Mohit Kumar, chief European strategist at Jefferies International, said, 'We do expect some progress in today's meeting and a path set for further discussions between Russia and the U.S.,' adding that 'if we move towards a peace deal, it would be positive for the European markets.' In other news, the EU and U.S. are moving toward finalizing the trade deal that President Trump and European Commission President Ursula von der Leyen agreed to in July. In corporate news, NKT A/S ( climbed over +8% after updating its full-year guidance. At the same time, Pandora A/S ( tumbled over -12% after the Danish jewellery maker posted weaker-than-expected Q2 organic revenue. The European economic data slate is mainly empty on Friday. Asian stock markets today settled in the green. China's Shanghai Composite Index (SHCOMP) closed up +0.83%, and Japan's Nikkei 225 Stock Index (NIK) closed up +1.71%. China's Shanghai Composite Index ended higher today as weak economic data from the country bolstered expectations of new stimulus measures from Beijing to support growth. Real estate stocks climbed on Friday after Bloomberg News reported that China is planning to mobilize companies owned by the central government in Beijing to purchase unsold homes from struggling property developers. The benchmark index notched its biggest weekly gain in nine months. Data from the National Bureau of Statistics released on Friday showed that China's economy weakened across the board in July, with factory activity, investment, and retail sales disappointing, indicating that Beijing's crackdown on destructive price wars and the spillover effects of U.S. President Donald Trump's tariffs are weighing on the world's second-largest economy. Also, the country's prolonged housing market downturn continued to weigh on growth, with the latest figures showing declining home prices and property investment. In addition, unemployment inched higher in July as millions of new graduates entered a sluggish labor market. China's top leaders refrained from introducing any major new stimulus measures in July, a cautious approach that economists say will need to be reconsidered to keep this year's 5% growth target attainable. ING economist Lynn Song said on Friday that 'the slump in July's data was more pronounced than expected,' noting that China needs to roll out additional stimulus measures. In other news, the Financial Times reported on Thursday that China is cautioning Western companies against stockpiling rare earths, warning they could face even greater shortages. In corporate news, slid over -3% in Hong Kong after the e-commerce operator posted a 51% drop in Q2 net income. The Chinese July Industrial Production rose +5.7% y/y, weaker than expectations of +6.0% y/y. The Chinese July Retail Sales rose +3.7% y/y, weaker than expectations of +4.6% y/y. The Chinese Fixed Asset Investment rose +1.6% y/y in the January-July period, weaker than expectations of +2.7% y/y. The Chinese July Unemployment Rate was 5.2%, weaker than expectations of 5.1%. Japan's Nikkei 225 Stock Index closed sharply higher today, posting a new record high, after the nation's economy expanded faster than expected last quarter. Financial stocks led the gains on Friday, supported by expectations that a Bank of Japan rate hike might come sooner rather than later. The benchmark index posted strong gains for the week. Preliminary government data released on Friday showed that Japan's economy expanded far more than expected in the second quarter, driven by robust domestic demand, strengthening the case for the BOJ to raise its benchmark rate again this year and offering embattled Prime Minister Shigeru Ishiba some rare good news. Separately, data showed that Japan's June industrial production was unexpectedly revised upward. Meanwhile, Benjamin Shatil, an economist at JPMorgan Securities, said, 'We continue to think that solid domestic demand data will necessitate a shift in the BOJ's narrative that tariff-related uncertainty is weighing on activity,' adding that he expects the central bank to raise its policy rate in October. According to the latest Bloomberg survey of economists tracking the BOJ, about 42% of respondents said they anticipate a hike in October, while one-third expect a move in January. Governor Kazuo Ueda said last month that policymakers will continue to raise borrowing costs if they are confident domestic demand will remain stable. In other news, foreign investors bought a net 489.3 billion yen ($3.32 billion) worth of Japanese stocks in the week through August 9th, fueled by a series of strong earnings that propelled domestic equities to new record highs, according to data from Japan's Ministry of Finance. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.20% to 24.61. The Japanese GDP has been reported at +0.3% q/q and +1.0% y/y in the second quarter, stronger than expectations of +0.1% q/q and +0.4% y/y. The Japanese June Industrial Production rose +2.1% m/m, stronger than expectations of +1.7% m/m. Pre-Market U.S. Stock Movers UnitedHealth Group (UNH) surged over +12% in pre-market trading after Warren Buffett's Berkshire Hathaway disclosed in a regulatory filing that it purchased about 5 million shares of the health insurer last quarter. Intel (INTC) rose more than +3% in pre-market trading after Bloomberg reported that the Trump administration was in talks to have the U.S. government take a stake in the company. Salesforce (CRM) gained about +1% in pre-market trading after DA Davidson upgraded the stock to Neutral from Underperform. Applied Materials (AMAT) plunged over -14% in pre-market trading after the largest chip-equipment maker in the world provided downbeat FQ4 guidance. Target (TGT) fell more than -1% in pre-market trading after BofA downgraded the stock to Underperform from Neutral with a price target of $93. You can see more pre-market stock movers here Today's U.S. Earnings Spotlight: Friday - August 15th Flowers Foods (FLO), So-Young (SY), T1 Energy (TE), Tuniu Corp (TOUR). On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
Yahoo
a day ago
- Yahoo
Cisco Operating in a 'Complex' Environment, Says CEO Robbins
Cisco CEO Chuck Robbins discusses the company's earnings and its plans for artificial intelligence infrastructure. Robbins joins Caroline Hyde and Ed Ludlow on "Bloomberg Tech." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
