Wall Street has been on the rise since the last CNBC Investing Club Monthly Meeting. However, the sell-off in recent days, growing concern over AI trades, has made the likes of Micron last week and defensive players such as Cardinal Health among the biggest weekly winners. At Wednesday’s close, the Nasdaq was down 2.5% so far this week, with the tech-less Dow Jones Industrial Average trailing since last Friday’s close. Another hot inflation report this morning and another bad day for AI stocks were widening the gap between the haves and the have-nots. The expectation of at least one Federal Reserve interest rate hike before the end of the year doesn’t help investors feel better about whether companies are borrowing too much to fund AI infrastructure development. From the September 10 meeting through Wednesday’s close, the tech story in the aggregate improved. The Nasdaq was actually 2.3% higher during the period, and the Dow was down nearly 1%. Before the October Monthly Meeting livestream, let’s review the winners and losers of our 32-stock portfolio as a baseline as we try to figure out where the market goes from here. Winners CrowdStrike up 19.4% Cybersecurity shares rose as concerns about the risks posed by increasingly powerful artificial intelligence models increase companies’ need to protect networks and data. Anthropic CEO Dario Amodei’s essay calls for frontier AI labs to slow model development amid growing security concerns. CrowdStrike has more than doubled this year – making us wary of chasing stocks after a strong run. Still, we continue to see cybersecurity as the “foundation” of our portfolio, with AI adoption providing another long-term growth driver. Meta platform up 14.4% Parents Facebook and Instagram are starting to show investors how big AI investments can pay off. Shares have surged since the September 8 launch of Muse, its personal AI agent, which quickly rose to the top of the app charts. The meta built on momentum this week with the release of Muse Wonder and the more powerful Muse Wonder Full, showing its ability to compete with leading AI developers. Wells Fargo says the Muse Wonder Full has reached “the forefront of AI,” ranking among the industry’s most advanced models. The release could help Meta Platform attract more paying customers to Muse and its coding tools, opening new revenue streams beyond advertising. Although it’s too early to know how much that revenue could turn out to be, the steady pace of AI releases is helping to address earlier concerns about whether the billions of Meta in AI spending will yield sufficient returns. TJX Companies rose 13% Shares of the off-rebound retailer rebound from a steep sell-off after disappointing August earnings and broader pressure on consumer stocks from higher inflation and interest rates. Investors were worried after second-quarter results showed comparable sales at Marmaxx, the company’s largest division, which includes TJ Maxx and Marshalls. At that time, the CEO said it was a product mix issue, which was being addressed. However, a recent Morgan Stanley survey suggested further weakness in Q2 was driven more by consumers pulling back on spending. It is encouraging for our thesis that TJX’s value-focused model and ability to acquire excess merchandise at attractive prices should help it navigate the challenging retail environment. We took advantage of the post-earnings weakness to increase our position multiple times and remain optimistic about long-term opportunities, although a meaningful sales recovery will take a quarter or two. Losers Bank of New York fell 15.4% and Goldman Sachs fell 13.8%. Higher rates could increase funding costs, reduce loan demand, and slow capital market activity – such as mergers and acquisitions (M&A) and initial public offerings (IPOs). Still, investors shouldn’t paint all sectors with the same brush. Despite solid earnings from Goldman Sachs on Tuesday, stocks continued to decline. We see the pullback as a buying opportunity. On Thursday, BNY reported earnings and saw better-than-expected fee growth. Members, watch this evening for the Club’s full analysis of BNY’s quarter in your text and email. FedEx Freight fell 12.4% Shares of the shipping company slumped as truckers struggled as the ongoing Iran war pushed diesel prices higher. Weakness extended to the transportation sector, with the iShares Transportation ETF down 3% and trucking company JB Hunt sliding 13% since the last Monthly Meeting. While we remain optimistic about FedEx Freight’s long-term outlook, we’ll be looking for signs of improving shipping demand and the company’s ability to manage higher costs before becoming more constructive about the stock’s short-term outlook. Boeing fell 9.8% The planemaker is under pressure from rising fuel prices, wider concerns about the aerospace industry and software problems affecting certain 737 Max planes. Higher oil prices threaten airline profits and could weigh on demand for new planes, adding to investor anxiety about manufacturers’ recovery. Boeing also disclosed a software error that could affect certain landing procedures, raising questions about the certification timeline for the 737 Max 10, which Boeing and the airline expect to arrive in early fall. However, the Federal Aviation Administration determined on October 2 that the issue did not pose a safety issue for aviation, removing a potential obstacle to certification. (Jim Cramer’s Charity Trust is long CRWD, PANW, META, TJX, BNY, GS, WFC, FDXF, BA. Read here for a full list of stocks.) As a CNBC Investing Club subscriber with Jim Cramer, you will receive trade alerts before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling shares in his charitable trust portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing a trade alert before executing a trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO THE TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH THE DISCLAIMER. No fiduciary obligation or duty is, or is created, pursuant to the receipt of any information provided in connection with the investment club. No special results or profits are guaranteed.
A tale of two markets: The 3 biggest winners and losers of the past five weeks