Market Recap: Tuesday’s Highlights
Stocks saw an upswing on Tuesday, following a consumer inflation report for June that came in lower than anticipated. This eased worries about possible interest rate hikes by the Federal Reserve this month. However, the software sector faced significant challenges after IBM announced it would have a disappointing quarter, primarily due to a downturn in its software business. IBM indicated that clients were reallocating their budgets toward servers, storage, and memory. As a result, IBM’s stock dropped roughly 26%, which was its largest decline since October 1987. Jim Cramer pointed out that this situation illustrates a shift in AI spending towards infrastructure and cybersecurity.
Meanwhile, Apple’s stock saw a decline of nearly 1% after KeyBanc downgraded it to an underweight sell and reduced its price target to $250, down from a previous close of $317. Analysts suggested that U.S. wireless carriers pulling back on device subsidies might delay the iPhone upgrade cycle, leading to overly optimistic growth expectations on Wall Street. KeyBanc also cautioned that recent price hikes on Macs and iPads could negatively impact demand and slow down Apple’s high-margin services division. Jim Cramer dismissed these concerns, emphasizing that they are based mostly on speculation rather than solid facts. “I like Apple here,” he stated.
Arm Holdings’ stock dropped over 5% after HSBC downgraded it to hold, warning that forthcoming foundry capacity issues might restrict earnings growth. Jim reiterated the club’s earlier decision to exit its position in Arm to invest more in Intel shares, praising Arm CEO Rene Haas but highlighting that Arm’s dependence on third-party foundries for chip production puts it at a disadvantage compared to Intel, which is expanding its own manufacturing capabilities. “I think Intel is a great buy here,” he remarked.
The episode concluded by featuring stocks like Capital One, Bank of America, JPMorgan, Johnson & Johnson, and HCA. As part of Jim Cramer’s CNBC Investment Club, subscribers receive trade alerts before any trades are made. After issuing a trade alert, Jim typically waits 45 minutes before executing any buy or sell orders within the charitable trust’s portfolio. If a stock is discussed on CNBC, he will issue a trade alert and then wait 72 hours to act on it. Further details regarding the investment club can be found in its Terms of Use and Privacy Policy.
