Latest news with #ISMServicesIndex
CNBC
05-05-2025
- Business
- CNBC
Here's why we're not buyers in Monday's session, even as stocks move lower
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. Market update: Stocks started the day on a weak note, dropping roughly 0.75% in early trading. However, stocks began to recover as the session went on — first boosted by a stronger-than-expected April ISM Services Index, and later supported by remarks from Treasury Secretary Scott Bessent at the Milken Conference and during an appearance on CNBC. The S & P 500 was off by roughly 0.2% at midday. If the broad-market index closes negatively, it will mark its first loss in two weeks, ending a nine-day winning streak that drove it up by 10%. This rally has also pushed the market further into overbought territory, based on the S & P Oscillator . When the oscillator is this overbought, we're typically cautious about deploying new capital into the market, unless the stock in question has experienced an unwarranted, significant pullback. Sector breakdown : Performance was mixed today, with only a few sectors firmly in positive territory. Industrials led the way, with airlines in particular benefiting from falling oil prices. The other two sectors in the green were communication services and real estate. On the downside, energy was the worst performer as oil prices hit their lowest level of the year. Consumer discretionary also struggled, with Tesla , Starbucks , Chipotle , Nike , and Amazon among the notable laggards. Technology was a mixed picture. Software stocks were mostly positive with cybersecurity having a particularly strong day. Apple extended its post-earnings selloff from last Friday. Semiconductor stocks mostly declined, with On Semiconductor dropping roughly 8% after issuing mixed guidance —reflecting its exposure to automotive and industrial markets, unlike AI-focused peers such as Nvidia and Broadcom . Up next: Coming after the closing bell, Coterra Energy will report its first quarter of earnings. The conference call discussing the results will be held Tuesday. Other companies scheduled to report: Ford , Palantir , Vertex Pharmaceuticals , Mattel , Clorox , Diamondback Energy , and Hims & Hers . Before the opening bell on Tuesday, Marriott , Jacobs , Aramark , Marathon Petroleum , Kontoor Brands , Datadog , Zoetis , Ferrari , and Global Foundries will report earnings. (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. Traders work on the floor of the New York Stock Exchange on May 1, 2025. 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.
Forbes
15-04-2025
- Business
- Forbes
The Economy Is Slowing; Tariffs Make It Worse
The tariff file has caused a high level of uncertainty both for consumers and businesses. As a result, all it took was the lifting of that uncertainty, via the 90-day suspension of higher tariffs, for the equity market to surge on Wednesday, April 9th. That day, the DJIA rose +7.9%, Nasdaq +12.2%, the S&P 500 +9.5%, and even the small cap Russell 2000 +8.7%.1 For the week as a whole, all four indexes were positive, led by the tech heavy Nasdaq as shown in the third column of the table. Still, equity markets remain negative for the month and year to date.1 Equity Market In addition, it appears that the markets haven't yet priced in a slowing economy (the latest Atlanta Fed Q1 GDP growth forecast is -2.4%).2 Another quarter of negative growth, as seems likely, will trigger the rule of thumb Recession call (i.e., two negative GDP growth quarters in a row) and would likely cause the National Bureau of Economic Research (NBER) to officially declare that the economy had entered a Recession.2 As further evidence of a slowing economy, the Challenger Gray and Christmas layoff data for March showed up at +275,240, the highest number for any March on record.3 Admittedly, much of this is due to DOGE's layoffs of federal employees. But we also note that Retail lost -57,000 jobs in March (vs. -12,000 in March 2024), and that hiring was down -37.5% from a year ago.3 The ISM Services Index fell in March to 50.8 from 53.5 in February (50 is the demarcation line between expansion and contraction).4 While still showing minimal expansion, the large March pullback does not bode well for the April reading.4 The National Federation of Independent Business' (NFIB) monthly business index fell to 97.4 in March from 100.7 in February.5 As the table shows, this index had a similar level at the beginning of the last six Recessions. NFIB Index Note that the recent 97.4 level fits right into the table. The University of Michigan's (UM) Consumer Sentiment Index fell to 50.8 in April from 57.0 in March, quite the fall.10 Just for comparative purposes, this is the lowest level since June '22 (Covid) and the second lowest reading on record dating back to 1952! Worse, the Trump tariffs have convinced the public that they will usher in more inflation as UM's one-year inflation expectations index soared to 6.7% in April from March's already high 5.0% reading.6The 5-year inflation expectations reading rose to 4.4% (from 4.1% in March), the highest reading for this index since 1991! University of Michigan Consumer Sentiment With such public expectations, the Fed has little choice but to forgo any rate reductions at its upcoming May meeting set. Despite the 90-day 'pause' in the tariff file for most countries, the risk of Recession is rising due to the 145% tariff on imports from China in addition to the high and rising level of uncertainty.7 Tariffs normally have a negative impact on profit margins. When uncertainty rises, business growth expectations fall, and they tend to delay any expansion plans. In addition, consumers become more cautionary and tend to spend less and save more.1 The following chart indicates that this process has already begun. Consumer Expectations With nominal income growth in the U.S. now showing weakness (i.e. the strong possibility of an oncoming Recession), that means either business profit margin compression or lower demand (or some combination of the two).9 During a Recession, the average equity market pullback is nearly -30%, normally over a 6 – 12-month period. And bond market yields fall by about 150 basis points (1.5 percentage points).11 Fed Chair Powell says the Fed is waiting for the softening survey data to translate into hard data before moving toward lower interest rates. This, even though his own Atlanta Fed has pegged Q1 GDP growth at -2.4%.2 (As noted, there already are many economic signs that the economy is cooling both on the business side and on the consumer side.) Because of the long lags between changes in monetary policy and their impact on the economy, it appears that the Fed should be lowering rates now when the soft data show a weakening economy, to adjust for those long lags.11 Despite the timing of policy changes, it is clear that the next move in monetary policy is to continue to lower rates. The Fed has told markets that the 'neutral' rate (known as R*) for the Federal Funds rate, is 3%. Right now, that Federal Funds rate is pegged between 4.25% and 4.50%. So, there's 125 to 150 basis points (i.e., 1.25 to 1.50 percentage points) of rate reduction just to get to neutral.11 But, as noted above, because of the recent rise in inflation expectations, it is unlikely that the Fed will lower rates at its May meeting, and is likely to wait for Powell's 'hard data' requirement (despite the negative growth rate of Q1 GDP).11 If a Recession actually develops, the Fed will have to take that Fed Funds rate below neutral (3%), how far depends on the severity of the economic slowdown. (We note that the major investment banks have significantly increased their odds of a Recession occurring in 2025.) Falling interest rates mean rising bond prices with the prices of longer-term bonds benefitting most. A note of caution here. China's holdings of U.S. Treasury securities peaked at $1.3 trillion in 2014. Today, they stand at $700 billion.12 13 That still is a significant amount. The dumping of those securities could easily cause a spike in interest rates. In fact, we've recently seen a small spike in rates making us wonder if the selling has already begun.14 The 90-day tariff suspension lifted uncertainty (on Wall Street, 90-days is 'long-term') causing large-cap equities to bounce 5% - 7% for the week (small cap stocks were positive too, but to a lesser extent (+1.8%)). Nevertheless, it still appears that markets have not yet priced in a slowing economy and the rising probability of Recession.15 We continue to see evidence of an economic slowdown. Q1 GDP growth will be negative according to the Atlanta Fed (-2.4%). We see no catalyst to turn that around. Layoff data were the highest for any March on record, which will soon translate into a higher unemployment rate.7 Other survey data, like the NFIB's monthly business index and the University of Michigan's Consumer Sentiment Index are also giving Recession signals.5 6 Tariffs, especially the large 145% rate on China, are bound to have negative impacts on business profit margins as well as a reduction in consumer demand as prices rise.7 The sudden rise in consumer inflation expectations, no doubt due to the tariffs, is bound to keep the Fed on the sidelines despite Q1's negative GDP reading. Chair Powell sees the softening survey data but insists that the Fed will wait for the hard data before it acts. In our view, because of the lag time between when the Fed acts and its impact on the economy, that's a mistake.11 (Joshua Barone and Eugene Hoover contributed to this blog.)
Yahoo
28-01-2025
- Business
- Yahoo
Jim Cramer's Broadcom (AVGO) Prediction Was Spot On
We recently published a list of Jim Cramer is Talking About These 10 Stocks. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other stocks that Jim Cramer is talking about. Jim Cramer in a latest program on CNBC discussed the reasons behind the recent market declines after the ISM Services Index data. Cramer said many are still expecting more rate cuts from the Federal Reserve soon but they are wrong. 'This survey showed surprising strength, so much strength that it makes you think that the FED might not give us more rate cuts anytime soon. Right now, a ton of investors believe that the FED needs to push through a bunch of rate cuts in order to revive the economy. Lots of those bulls are counting on those cuts. That seems wrong today. They were rocked to the core because not only have they been wrong, but they're starting to question the FED's credibility. They know nothing,' Cramer said. Cramer said he was 'mystified' by the Fed's rate cuts amid strong economic data. 'These traders are wondering why the heck the FED cut short rates by 50 basis points September then give another 25 in November another 25 in December what the heck did they see that made them so aggressive judging by the data. Nothing. The credibility issue, if you claim you're data dependent, and the data is strong then why the heck are you cutting so aggressively.' Cramer at the time said the latest nonfarm payrolls report would be one of the most important indicators of the economy and it would set the 'dialog' in the coming days. Sure it will. The latest jobs data showed unemployment fell and job additions crushed Wall Street expectations. Many now believe the Fed is set to put brakes on rate cuts. READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In For this article, we picked 10 stocks Cramer recently talked about. With each company, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).In early November, answering a question about a company, Jim Cramer said: 'The semiconductor stocks are so hated that I have to urge you to buy a regular semiconductor right now because they are being put for sale like you wouldn't believe. But go buy Broadcom, go buy Broadcom, AVGO, and you will like it more than Ultra. I'll tell you, really.' Broadcom Inc. (NASDAQ:AVGO) continues to be a leader in the AI ASCI and networking chips market. Broadcom Inc. (NASDAQ:AVGO) has 3nm AI ASIC chip deals with Alphabet and Meta in addition to many other tech giants aiming massive spending for AI hyperscaling. However, the stock could face the impact of what Nvidia is facing today: too high expectations. In the latest quarterly results, Broadcom Inc. (NASDAQ:AVGO) revenue was largely in line with estimates. The company has narrowly exceeded revenue expectations by less than 5% in most cases. Some analysts suggest Broadcom's growth rates will moderate to below 20% CAGR starting the first quarter of 2025. In fiscal Q4, it was +50% topline growth. The market won't be kind to the stock when the revenue growth rate slows. Broadcom has about $58 billion in net debt, which is relatively high. Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its : 'Similar to the earnings results for Nvidia, shares of Broadcom Inc. (NASDAQ:AVGO) initially sold off after the company reported solid earnings that fell light of elevated market expectations, but the stock did recover from its drawdown in the matter of a few weeks. With an enticing combination of custom chip offerings as well as networking assets, Broadcom remains one of the best positioned companies as part of the AI revolution. Broadcom outlined a path to derive a majority of its revenue from the AI end market within a couple of years, and the non-AI part of the business has stabilized after a deep correction. The company's dominant market position in its end markets, along with durable growth, strong margins and best-in-class capital allocation, presents an opportunity to compound capital over time.' Overall, AVGO ranks 1st on our list of stocks that Jim Cramer is talking about. While we acknowledge the potential of AVGO, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
28-01-2025
- Business
- Yahoo
Jim Cramer Says You Should Buy Johnson & Johnson (JNJ) Dividend Stock With 3.3% Yield
We recently published a list of Jim Cramer is Talking About These 10 Stocks. In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against other stocks that Jim Cramer is talking about. Jim Cramer in a latest program on CNBC discussed the reasons behind the recent market declines after the ISM Services Index data. Cramer said many are still expecting more rate cuts from the Federal Reserve soon but they are wrong. 'This survey showed surprising strength, so much strength that it makes you think that the FED might not give us more rate cuts anytime soon. Right now, a ton of investors believe that the FED needs to push through a bunch of rate cuts in order to revive the economy. Lots of those bulls are counting on those cuts. That seems wrong today. They were rocked to the core because not only have they been wrong, but they're starting to question the FED's credibility. They know nothing,' Cramer said. Cramer said he was 'mystified' by the Fed's rate cuts amid strong economic data. 'These traders are wondering why the heck the FED cut short rates by 50 basis points September then give another 25 in November another 25 in December what the heck did they see that made them so aggressive judging by the data. Nothing. The credibility issue, if you claim you're data dependent, and the data is strong then why the heck are you cutting so aggressively.' Cramer at the time said the latest nonfarm payrolls report would be one of the most important indicators of the economy and it would set the 'dialog' in the coming days. Sure it will. The latest jobs data showed unemployment fell and job additions crushed Wall Street expectations. Many now believe the Fed is set to put brakes on rate cuts. READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In For this article, we picked 10 stocks Cramer recently talked about. With each company, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here). Trong Nguyen / about Johnson & Johnson (NYSE:JNJ), Cramer said he'd recommend this stock amid its attractive valuation and dividend. ''Oh man, this stock is just so, it's 3.3% yield. It's got really fabulous drugs. I know the whole drug stocks, the whole cohort is down, but if you can get this company for 14 times next year's owner, this is Johnson & Johnson (NYSE:JNJ). Even with the talc litigation, I do want to buy it down here. Drug stocks are way out of favor.' Overall, JNJ ranks 5th on our list of stocks that Jim Cramer is talking about. While we acknowledge the potential of JNJ, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than JNJ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
26-01-2025
- Business
- Yahoo
Jim Cramer Says You Should ‘Keep Owning' Energy Transfer (ET) 7% Dividend Yield Stock
We recently published a list of im Cramer is Talking About These 10 Stocks. In this article, we are going to take a look at where Energy Transfer LP (NYSE:ET) stands against other stocks that Jim Cramer is talking about. Jim Cramer in a latest program on CNBC discussed the reasons behind the recent market declines after the ISM Services Index data. Cramer said many are still expecting more rate cuts from the Federal Reserve soon but they are wrong. 'This survey showed surprising strength, so much strength that it makes you think that the FED might not give us more rate cuts anytime soon. Right now, a ton of investors believe that the FED needs to push through a bunch of rate cuts in order to revive the economy. Lots of those bulls are counting on those cuts. That seems wrong today. They were rocked to the core because not only have they been wrong, but they're starting to question the FED's credibility. They know nothing,' Cramer said. Cramer said he was 'mystified' by the Fed's rate cuts amid strong economic data. 'These traders are wondering why the heck the FED cut short rates by 50 basis points September then give another 25 in November another 25 in December what the heck did they see that made them so aggressive judging by the data. Nothing. The credibility issue, if you claim you're data dependent, and the data is strong then why the heck are you cutting so aggressively.' Cramer at the time said the latest nonfarm payrolls report would be one of the most important indicators of the economy and it would set the 'dialog' in the coming days. Sure it will. The latest jobs data showed unemployment fell and job additions crushed Wall Street expectations. Many now believe the Fed is set to put brakes on rate cuts. READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In For this article, we picked 10 stocks Cramer recently talked about. With each company, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).Answering a question about Energy Transfer LP (NYSE:ET), Jim Cramer said: 'I want you to keep owning it. It's got a 7% yield, and if it goes down, just buy more. I like Energy Transfer. I used to dislike it, but I've liked it now for the last five points.' Energy Transfer LP (NYSE:ET) is among the largest midstream companies in the world, with over 130,000 miles of pipelines and nearly 900,000 barrels per day in natural gas liquids (NGL) gathering capacity. The company makes about 90% of its EBITDA from fees, which makes it less cyclical compared to upstream energy companies that produce oil and gas. The company can benefit in the coming days amid an expected end to the pause on pending and future export permits for new liquefied natural gas projects. Energy Transfer's $13 billion LNG-export facility in Louisiana is one of the projects impacted by this pause. Then there's AI. Energy Transfer LP (NYSE:ET) is expected to be one of the biggest beneficiaries of the AI-based data center boom. The company talked about this opportunity in : 'Given Energy Transfer's extensive interstate and intrastate natural gas pipeline footprint, we are the best positioned to capitalize on the anticipated rise in natural gas demand for AI data centers, natural gas power plants and industrial and onshore manufacturing for decades to come. We have never seen this level of activity from a demand pull standpoint and these opportunities are truly spread across our natural gas footprint from Arizona to Florida and from Texas to Michigan. Overall, ET ranks 10th on our list of stocks that Jim Cramer is talking about. While we acknowledge the potential of ET, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey.
