Stocks have had another great run since the club’s last monthly meeting in June. The prospect of the Federal Reserve cutting interest rates sooner rather than later following recent upbeat inflation data has pushed stocks to new highs over the past few weeks. Traders now see a 100% chance of a rate cut by September, according to the CME FedWatch tool. The Dow Jones Industrial Average hit an all-time intraday high on Tuesday, while the S&P 500 did the same on Monday. The Nasdaq Composite also hit a new high on July 11. To take advantage of the overbought market, we executed a series of trades. The club sold shares of TJX Companies on Friday to raise some extra cash. Before that, we sold Meta Platforms and Palo Alto Networks on July 8, making massive gains of 150% and 94%, respectively, since we first bought both. On the flip side, we looked for opportunities during the tech downturn. We started with a small position in Advanced Micro Devices, a stock we owned as recently as the summer of 2023, and bought more on Tuesday. Through all the portfolio moves, a major theme has emerged in the stock market, especially over the past week. Investors are seizing opportunities to get into sectors outside of big tech. The Russell 2000, which measures the performance of small-cap U.S. stocks, has jumped about 11% over the past five sessions. Meanwhile, the tech-heavy Nasdaq is down 0.18% over the period. Case in point: Some of our biggest winners in 2024, large-cap stocks like Amazon, Alphabet, Meta and Microsoft, have posted losses since our last meeting. Amazon is still up 27% for the year, while Alphabet and Meta are up 31% and 38%, respectively. Other losers include our China-linked stocks: Wynn Resorts, Starbucks and Estee Lauder. In all, 12 of the portfolio’s 34 stocks were in the red. We see market rotation playing a role in our top five performers, too. From the June 27 close through Tuesday, only one large-cap tech company was in the red. Here are our top five and what’s driving the gains for each: 1. Ford Motor: 17.7% There wasn’t a single catalyst for Ford Motor’s outperformance. However, investor sentiment appears to have improved as sales show signs of a recovery. Shares of the automaker surged on July 3 after the company said hybrid vehicle sales surged 56% in the second quarter, setting a new quarterly sales record for the sector. On July 11, the stock jumped again after the June CPI print pointed to easing inflation and bolstered the Federal Reserve’s case for lowering interest rates — an environment that could lead to more consumers buying Ford vehicles. The stock hit a 52-week high of $14.43 on Monday. 2. Morgan Stanley: 10.9% Will a second Donald Trump presidency benefit America’s big banks? Morgan Stanley investors seem to think so. Shares surged after President Joe Biden and Trump faced off during the June 27 presidential debate, which many saw as a big win for the former president. Morgan Stanley’s momentum continued into July and reached an all-time high of $109.11 on Tuesday after the bank posted a largely better-than-expected second-quarter report. We raised our price target to $120 from $98 per share following the results. 3. Stanley Black & Decker: 10.5% Shares of Stanley Black & Decker have been rising on recent signs of upcoming monetary easing, which could spur housing market activity due to lower borrowing costs. More homeowners mean more demand for parent company DeWalt’s offerings as buyers look for tools to fix things around the house. That, coupled with investors looking for pockets outside of Big Tech, has led the stock to rally since July 1. The company’s shares rose 3.5% on Tuesday, and the club took advantage of the stock’s advance, reducing our position in the afternoon. We certainly still see long-term gains ahead once the Fed starts cutting rates. 4. Apple: 9.7% Apple hit a record high of $237.23 on Monday after Morgan Stanley listed the stock as a top pick in the industry. Wall Street analysts said the company’s AI efforts would trigger a much-needed upgrade cycle for the company’s flagship iPhone. Morgan Stanley also raised its price target on Apple to $273 from $213, up 16% from Tuesday’s close. The stock doesn’t seem to be stopping: It’s been rising for months on excitement over Apple’s AI plans, most recently unveiled at the company’s Worldwide Developers Conference on June 10. 5. Dover: 7.3% Dover began its rally on July 9 as capital circulated into sectors that benefit most from interest rate cuts. Dover is an industrial name that produces thermal conductors used in one of the world’s fastest-growing end markets: data centers. That makes Dover a great under-the-radar AI play. “Dover is going to be a big name for me,” Jim recently said. Shares hit an all-time high Tuesday at $190.54 each, and closed about 3% higher today. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) As a subscriber to 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 talks about a stock on CNBC TV, he waits 72 hours after sending a trade alert before executing the trade. The above investment club information is subject to our Terms and Conditions and Privacy Policy, as well as our Disclaimer. No fiduciary duty or obligation is, or is created, by your receipt of any information provided in connection with the investment club. No specific outcome or profit is guaranteed.
A trader works as a screen broadcasts a news conference by U.S. Federal Reserve Chairman Jerome Powell following the announcement of the federal funds rate, on the floor of the New York Stock Exchange in New York City, U.S., June 12, 2024.
Brendan McDiarmid | Reuters
We have seen another great performance for the stock since the last monthly club meeting in June.
