The post-election rally came to a halt this week as investors started to get a better sense of what a second Donald Trump term might look like, with the president-elect announcing several picks for ranking positions within his administration. By Friday’s close, the S & P 500 was 2.08% lower on the week, while the Dow fell 1.24%, and the Nasdaq pulled back by 3.15% to close out the week. It’s worth noting, though, that while down this week, all three are headed into Monday’s session at levels higher than their closing prices on Nov. 4, the day before the election. .SPX .DJI,.IXIC mountain 2024-11-01 S & P 500, Dow, Nasdaq since Nov. 1 While the first half of last week was relatively muted, with the three major benchmarks largely consolidating the election week’s gains, this past Thursday and Friday saw the stocks sell off rather sharply. The culprit was Federal Reserve Chairman Jerome Powell, saying Thursday that “the economy is not sending any signals that we need to be in a hurry to lower rates.” In turn, the market odds of central bankers’ holding interest rates steady at next month’s meeting went above 38%, according to the CME FedWatch tool . The Fed kicked off its rate-cutting cycle with a jumbo 50-basis-point reduction in September and followed with a traditional 25-basis-point move in November. The irony of selling on such a comment is that Powell can only make a comment like that when the economy is doing well. Therefore, any further weakness from here, on rate fears, is likely to result in buyable dips. After all, we have long said that we would rather a higher-rate environment with a healthy economic backdrop than a lower-rate one that is the result of deterioration. In the data department, we got an in-line October consumer price index Wednesday morning. The core rate, excluding volatile food and energy prices, did accelerate 3.3% year-over-year, supporting Powell’s commentary that there isn’t much rush to cut rates. The producer price index report for last month, out Thursday, was also largely in line with expectations. October retail sales, released Friday morning, came in slightly ahead of expectations, indicating a 0.4% monthly increase, versus a 0.3% increase expected. That’s certainly a positive given that two-thirds of U.S. economic activity is driven by private consumption. Better yet, the September reading was revised higher, to indicate a 0.8% monthly increase, up from the 0.4% monthly increase previously reported. That means the October gain started from an even larger base. October industrial production and capacity utilization were also released on Friday and tracked right in line with expectations. Among the 11 S & P 500 sectors, communication services led to the upside, followed by consumer discretionary, and financials. Those were the only three sectors to close higher for the week. Real estate, on the other hand, led to the downside, followed by technology and utilities. Disney’s reported strong earnings and its stock advanced more than 16% for the week as a result. Disney seems to have finally set the stage for sustained growth in the years to come. In fact, since Thursday morning’s results, Disney stock went on a two-day tear, bringing its current winning streak to nine straight days. Disney was our top-performing stock of the week. Our other Club that reported earnings this week was Home Depot . Its quarter on Tuesday showed that the home improvement retailer continues to be held back by the headwind of higher mortgage rates. The stock was flat for the week despite the consumer discretionary sector strength. Mortgages have been following bond yields higher despite the Fed’s monetary easing campaign. In the week ahead, we will get earnings from three Club names, including the highly anticipated quarter from Nvidia, and a couple of housing market-related updates. Earnings All of this week’s earnings action is on Wednesday, starting with TJX Companies , the off-price retailer behind the T.J. Maxx, Marshalls, and Home Goods brands. TJX YTD mountain TJX Companies YTD We’re interested to hear TJX management’s thoughts on the inventory landscape as we head into the holiday season. With inflation still an issue, we continue to think that TJX-owned locations will prove to be go-to destinations for holiday shoppers in search of a deal. Whether that browsing turns into sales, however, is going to depend on management’s ability to source quality inventory. Fortunately, the team has proven uniquely adept at this, so we’re not too concerned. The Street is looking for fiscal 2025 third-quarter TJX sales of $13.95 billion, earnings of $1.09 per share, and a 3% year-over-year increase in same-store sales. TJX shares finished Friday just a nick under their Nov. 13 record-high close of $121.13 each. NVDA YTD mountain Nvidia YTD As for Nvidia , which reports after Wednesday’s closing bell, the focus remains on guidance. Shares are pricing in a top- and bottom-line beat for its fiscal 2025 third quarter. That should come as no surprise given CEO Jensen Huang’s comments about “insane” demand for the company’s industry-leading artificial intelligence chips. Therefore, it is management’s outlook that will determine how the stock reacts. Nvidia became the most valuable U.S. company, again, on Election Day. The stock was about $8 per share off its record-high close on Nov. 7. In addition to the results and guidance, we expect to hear some questions relating to China, now that we know officially, that Trump will be re-entering the White House come January. Everyone, Nvidia management included, is in something of a wait-and-see mode. However, the more the company can do to quantify the risk of increased restrictions and/or tensions in the world’s second-largest economy, the better investors will feel about modeling possible outcomes. We also want to hear about the progress being made in ramping up production of Nvidia’s next-generation Blackwell chip platform and increasing supply to catch up with ferocious demand. The Street is looking for Nvidia sales of $33.1 billion in its fiscal Q3 and earnings of 75 cents per share. PANW YTD mountain Palo Alto Networks YTD Turning to Palo Alto Networks , also out late Wednesday, it’s all about what management has been seeing in terms of the cyber threat environment heading into and since the election. It remains high and is becoming more sophisticated due to AI . Wall Street is looking for fiscal 2025 first quarter Palo Alto Networks sales of $2.1 billion, earnings of $1.48 per share, and a remaining performance obligation of $12.46 billion. Shares of Palo Alto Networks finished Friday a few dollars below their Nov. 13 record-high close of $402.36 each. Economy It will be a relatively light week in terms of macroeconomic updates compared to the past two weeks, which have been packed with key inflation and jobs data. That said, we will be getting a look at the state of the housing market with the release of October housing starts on Tuesday, and October existing home sales on Thursday. Both are important as any increase in supply coming to the real estate market is what we need to help stem the rise in home prices. Remember, shelter costs, a big component of the consumer price index, have been a very sticky and major roadblock to the Fed hitting its 2% overall inflation target. The housing starts number is arguably the more important one as it points to an actual increase in living spaces, whereas existing home sales may point to more supply on the market. Either way, we want to see increases as a rebound in housing formation is core to our investment cases in several stocks including Home Depot and Stanley Black & Decker for the tools needed to build and renovate homes, as well as Best Buy for its big-ticket appliances and TV to fill them up. October housing starts are expected to be down 0.75% monthly according to FactSet, while existing home sales are expected to come in at a seasonally adjusted annual rate of 3.88 million, a slight pickup from September’s pace. Week ahead Tuesday, Nov. 19 8:30 a.m. ET: Housing Starts Before the bell earnings: Walmart (WMT), XPeng (XPEV), Lowe’s (LOW), Medtronic (MDT), Vipshop (VIPS), Viking Holdings (VIK) After the bell: La-Z-Boy (LZB) Wednesday, Nov. 20 Before the bell: TJX Companies (TJX), Target (TGT), Nio (NIO), Williams-Sonoma (WSM) After the bell: Nvidia (NVDA), Palo Alto Networks (PANW), Snowflake (SNOW) Thursday, Nov. 21 8:30 a.m. ET: Initial Jobless Claims 10 a.m. ET: Existing Home Sales Before the bell: Baidu (BIDU), PDD Holdings (PDD), Deere & Co (DE), BJ’s Wholesale (BJ), Warner Music Group (WMG) After the bell: Gap (GAP), Intuit (INTU), Ross Stores (ROST), NetApp (NTAP) (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. 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Traders work on the floor of the New York Stock Exchange at the opening bell on November 13, 2024, in New York City.
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The post-election rally came to a halt this week as investors started to get a better sense of what a second Donald Trump term might look like, with the president-elect announcing several picks for ranking positions within his administration.
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