Economy
Morgan Stanley tumbles, GE Healthcare climbs — what’s driving Thursday’s major portfolio stock moves
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. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.) Markets Bounce Back : Stocks rebounded from Wednesday’s sell-off on inflation fears, as interest rates spiked and many market prognosticators recalibrated their Federal Reserve interest rate cut projections to maybe one or two this year, if any. However, Thursday’s producer price index report, which came in cooler to in-line, assuaged some of those concerns, helping stocks and bonds rally. Banks weaker ahead of earnings: Despite the market rally, financial stocks are lower Thursday, with a prominent exchange-traded fund for the industry working on its third consecutive down day. The selling comes right ahead of the unofficial start to first-quarter earnings season with a few of the big banks reporting Friday including Club holding Wells Fargo . BlackRock , Citigroup and JPMorgan Chase also are scheduled to report. “I think that the market is confused about the Fed and nothing else and fears JPMorgan CEO Jamie Dimon [will be talking about ]talking 8% rates tomorrow,” Jim Cramer said Thursday. “Makes sense.” In Dimon’s annual letter to shareholders released Monday, he discussed the bank’s preparedness for a broad range of interest rates, from 2% to 8%. In other news, Morgan Stanley fell midday on reports that U.S. regulators including the Office of the Comptroller of the Currency and the Securities and Exchange Commission are probing the bank’s wealth management business over concerns about money laundering. Our initial view is that the stock’s more-than-4% decline on the news is an over reaction. Bausch gets a “win”: The U.S. Court of Appeals for the Federal Circuit ruled in favor of Club holding Bausch Health in its defense against preventing a generic version of Xifaxan until 2029. Analysts at Jefferies called the decision “an extremely positive outcome” for the Canadian pharmaceutical maker because it removes a major hurdle preventing it from spinning off its stake in eye-care firm Bausch + Lomb to shareholders. Xifaxan, which is used to treat irritable bowel syndrome, is Bausch Health’s key product. “The news is a clear positive but the company still needs to settle with hedge funds against a fraudulent conveyance case. After that it could go higher,” Jim said. The Club has maintained a 4 rating on Bausch Health for a while as the drugmaker works through its legal challenges. Other items: Costo released its March sales Wednesday evening and reported a low-double-digit increase in non-food sales. “I like that Costco sees strong hardware — goes well for Best Buy,” Jim said. Our investment thesis in Best Buy , which joined the portfolio last month, centers around a return in spending on consumer electronics. GE Healthcare is a top-five performing stock in the S & P 500 on Thursday, jumping more than 3%. The only news around the company was Mizuho raising its price target to $110 from $96 and reiterating it as a top large-cap pick on a bullish hospital capital spending backdrop and margin upside potential. Jim agrees that there is margin improvement ahead for GE Healthcare. Club holdings Broadcom , Apple and Nvidia also were near the top of the S & P 500 leaderboard Thursday, amid a broader upward move in tech stocks. The S & P 500’s information technology sector led the index higher. (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. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.)
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