The economic fears that sent stocks tumbling in early August have calmed further in recent days, helping Wall Street have its best week of the year. The tech-heavy Nasdaq Composite led the gains with a 5.3% weekly gain, followed by the S&P 500 with a 3.9% gain and the Dow Jones Industrial Average with a 2.9% gain. That’s the biggest weekly gain in 2024 for all three major stock indexes. While no earnings have been reported by club holdings in the past five sessions, there have been some important updates on the state of the economy. The main report of the week, the July Consumer Price Index on Wednesday, came in slightly below expectations at the headline level, rising 2.9% annualized against the expected 3%. Core CPI, which excludes volatile food and energy prices, was in line with expectations at 3.2% annualized. The day before, the release of a weaker-than-expected July Producer Price Index sent major stock indexes soaring, setting the tone for the rest of the week. On Thursday, weaker-than-expected initial jobless claims and much stronger-than-expected July retail sales were released, showing that the economy is holding up despite the drop in inflation. This is great news for the stock market, with the S&P 500, Dow Jones Industrial Average and Nasdaq Average all posting another round of gains later in the week. Friday’s update on the U.S. housing market was disappointing, but not enough to eclipse the optimistic outlook. Housing starts were at a seasonally adjusted annual rate of 1.238 million, below the 1.35 million expected, according to FactSet. Building permits were at a seasonally adjusted annual rate of 1.396 million, below the 1.43 million expected, according to FactSet. Home Depot, Walmart and other companies released quarterly earnings, with 93% of the S&P 500 reporting profits. Of the companies that reported, 79% beat profit expectations and 60% reported revenues that beat expectations, according to FactSet. Breaking down the S&P 500, technology was the top performer, surging 7.5% for the week. Consumer discretionary and financials, the cyclical groups that were hit hard in early August, came in second and third, rising 5.2% and 3.2%, respectively. Real estate was the worst performing of the 11 sectors in the S&P 500, but only gained 0.07%. Energy and utilities were the next biggest laggards, but still rose 0.85% and 0.97%, respectively. With not much on the macroeconomic calendar over the next five trading sessions, corporate earnings and management comments are expected to dictate Wall Street’s moves. Economy: After a busy past few days, there have been few updates on the economy this week. However, the state of the U.S. housing market will be in the spotlight. The July existing home sales report is due to be released on Thursday, followed by the new home sales report the day after. Housing costs remain a stubborn driver of inflation, with the housing index in this week’s CPI report showing a 5.1% increase year-over-year. So any signs that more people are willing to put their homes up for sale as interest rates fall should be seen as a positive for home affordability and, by extension, the U.S. economy. The more supply there is on the market, the better it is for buyers. We say housing is “overperforming” in terms of economic impact, because new homes mean increased demand for everything from furniture to utilities to services like internet. Fed remarks: Also on Friday, Federal Reserve Chairman Jerome Powell is scheduled to speak at the annual central bank meeting in Jackson Hole, Wyoming. Investors will be listening to Powell’s latest thoughts on the U.S. economy, and especially the labor market. At the Fed policy meeting in late July, Powell suggested that a rate cut could be on the table in September if inflation and employment data continued to point to easing price pressures and a softening labor market, but a lot has happened since then. A few days after that statement, a weaker-than-expected July jobs report raised concerns about an impending U.S. recession, but those fears have eased thanks to more upbeat data in recent days. Earnings: On the earnings front, we have earnings coming from Club holdings Estee Lauder, Palo Alto Networks and TJX Companies. Estee Lauder: The cosmetics maker is set to release its fourth-quarter earnings on Monday morning, meaning that guidance for the current fiscal year will likely drive the stock’s reaction. Our expectations for the reported quarter are fairly low, and we opted to sell a portion of Estee Lauder last month, in order to avoid selling only winners and saddled with a large number of underperforming names. We will be closely monitoring margins, looking for signs that management’s profit recovery plan is effective, despite the weak consumer environment, especially in China. Palo Alto Networks: As we noted in our detailed preview of the quarter on Friday, our three focuses aside from revenue and earnings results are progress on our “platformization” strategy, growth in remaining performance obligations, and signs of healthy customer demand. We continue to see cybersecurity as an important long-term theme to invest in. However, we revised our rating to 2 on Friday after Palo Alto’s stock price rallied significantly over the past two weeks, meaning we will wait for the stock to fall before adding to our position. The TJX Companies: In addition to revenue and earnings, we will be keeping an eye on same-store sales figures for TJ Maxx and Marshalls, as well as the Home Goods division. It will also be interesting to hear executives talk about foot traffic and sales volume, as we believe inflation-wary consumers will flock to off-price stores (TJX owns the best stores) for the best deals. This should translate into a successful back-to-school season for TJX. Monday, August 19th Before the bell: Estee Lauder (EL), ZIM Integrated Shipping (ZIM) After the bell: Palo Alto Networks (PANW), Fabrinet (FN) Tuesday, August 20th Before the bell: Lowe’s Companies (LOW), Workhorse Group (WKHS), Medtronic (MDT), Navios Maritime Partners LP (NMM), Futu Holdings (FUTU), Kingsoft Cloud Holdings (KC), Vipshop Holdings (VIPS), XPeng (XPEV), Amex Sports (AS), H World Group (HTHT), Premier (PINC), Aihuishou International (RERE) After the bell: Dada Nexus (DADA), La-Z-Boy (LZB), Toll Brothers (TOL), Keysight Technologies (KEYS), Jack Henry & Associates (JKHY), Chilean Chemical Mining Company (SQM), ZTO Express (ZTO), Coty (COTY) Wednesday, August 21st 21 2:00 PM ET: FOMC Minutes Before the Bell: TJX Companies (TJX), Target (TGT), Macy’s (M), Dycom Industries (DY), Analog Devices (ADI), ZEEKR Intelligent Technology Holding (ZK) After the Bell: Snowflake (SNOW), Zoom Video Communications (ZM), Wolfspeed (WOLF), Synopsys (SNPS), Agilent Technologies (A), Urban Outfitters (URBN), Nordson (NDSN) Thursday, August 22 8:30 AM ET: Initial Jobless Claims 9:15 AM ET: Flash PMI 10:00 AM ET: Existing Home Sales Before the Bell: Baidu (BIDU), OSI Systems (OSIS), Peloton Interactive (PTON), Advance Auto Parts (AAP), BJ’s Wholesale Club (BJ), Canadian Solar (CSIQ), Weibo (WB), Bilibili (BILI), NetEase (NTES), TD Bank (TD), Viking Holdings (VIK) After the Bell: CAVA Group. (CAVA), Bill.com Holdings (BILL), Workday (WDAY), Intuit (INTU), Ross Stores (ROST) Friday, August 23 at 10AM ET: New Home Sales Before the Bell: Gold Fields (GFI) (Jim Cramer’s Charitable Trust is LONG *** FILL IN ***. Click here for a complete list of stocks.) Subscribers to Jim Cramer’s CNBC Investing Club receive trade alerts before Jim makes any trades. Jim waits 45 minutes after sending a trade alert before buying or selling shares in the Charitable Trust’s portfolio. If Jim talks about a stock on CNBC TV, Jim waits 72 hours after issuing a trade alert before executing the trade. The above Investment Club information is subject to our Terms of Use and Privacy Policy, as well as Disclaimer. Receipt of any information provided in connection with the Investment Club does not create any fiduciary duty or liability, and no particular results or benefits can be guaranteed.
Traders work on the floor of the New York Stock Exchange on August 16, 2024.
Angela Weiss | AFP | Getty Images
Economic fears that sent stocks plummeting in early August have subsided further in recent days, helping Wall Street enjoy its best week of the year.
