adminEvery 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 check: Stocks are trending lower Friday, a day after the S & P 500 and Nasdaq closed at a new record high. It caps off a positive week for the S & P 500, though most of the gains have been concentrated around a select group of stocks that are generating revenue from artificial intelligence. The divergence in returns this week was startling. The tech sector rallied more than 6% thanks to huge moves in names like Club holdings Broadcom , Nvidia , Apple , and Microsoft — and with those last three companies all being worth more than $3.2 trillion each, their moves have an outsized effect on the market-cap weighted S & P 500. At nearly $800 billion following its earnings-driven surge this week, Broadcom is among the 10-most valuable companies in the S & P, too. Meanwhile, the energy, financials, and industrials sectors all dropped by more than 1% on concerns of slowing economic growth. We always prefer to see rallies led by the banks because those moves tend to be the most durable. What it means: When you get this type of divergence, a familiar debate ensues: Will those market generals fall back to the rest of the army, or will the laggards “catch up” as part of a broadening out of the rally? That’s a really difficult call to make. And in times like this, we always point back to our investment principles — with an especially important one being discipline trumps conviction after a big move. That’s why we trimmed Palo Alto earlier Friday and indicated our plan to take profits in Broadcom when our trading restrictions allow. Make no mistake, we still want to own both long term: Broadcom has the AI theme on its side, and Palo Alto Networks benefits from a seemingly nonstop flood of cyberattacks hitting companies big and small. But we also cannot lose sight of the fact that Broadcom has doubled since we started buying last summer while Palo Alto has been a winner despite a lumpy year. No one ever got hurt taking a profit. “We need to preserve gains, raise a little cash after the monster run in some of our stocks,” Jim Cramer said. “It’s a move out of discipline that could serve us well if the economy is weakening faster than thought.” At the same time, we put a little cash to work earlier Friday in DuPont as the stock is up less than 2% since the chemicals giant announced on May 23 a value-creating plan to split into three separate entities. We continue to believe this is a great move for shareholders. Dow is the dog: The Dow Jones Industrial Average is in the red for week, a reflection of the AI trade’s dominance considering the composition of the stock gauge and its price-weighted nature. Just like the Dow has lagged the S & P and tech-heavy Nasdaq, most of our Club-owned Dow names have been laggards. Excluding Apple and Microsoft, which had strong weeks, Amazon and Salesforce were weak. Industrial conglomerate Honeywell , consumer product giant Procter & Gamble and entertainment heavyweight Disney were also nothing to write home about this week. Up next: We have a holiday-shortened trading week ahead as the New York Stock Exchange is closed Wednesday in observance of Juneteenth. It’s a fairly light economic and earnings calendar, though May retail sales on Tuesday and some housing releases on Thursday and Friday will be of interest. (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.
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.
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