What Cramer is watching Wednesday — more hot inflation, PepsiCo strong, drug stocks mixed

Published Wed, Oct 12 20228:55 AM EDTUpdated Wed, Oct 12 20229:05 AM EDT

What I am looking at Wednesday, Oct. 12, 2022 U.S. stock futures lose some steam as bond yields rise after the government says producer prices in September were hotter than expected. There's nothing good here. Market still expects a fourth straight 75-basis-point interest rate hike at the Federal Reserve's meeting next month. Thursday, we get the latest read on consumer prices. PepsiCo (PEP) jumped more than 2% in the premarket after reporting better-than-expected quarterly earnings and revenue and raises guidance. Starting to see turn in costs. Revenue growth 16%. Case volumes up. Taking share everywhere, especially in Frito and Gatorade. Growing everywhere in major brands. Big change: Backing big categories no longer niche items. Affordable luxury. Raymond James lowers price target on Club holding Procter & Gamble (PG) to $155 per share from $175; keeps outperform (buy) rating). Says pricing power and improved efficiencies making up for strong dollar, inflation and China. JPMorgan lowers fiscal first-quarter estimates on Club holding Qualcomm (QCOM); but raises price target to $190 per share from $185 and keeps overweight (buy) rating. JPM still sees full-year earnings growth, "contrary of implications" of 9x multiple. Morgan Stanley adjusts price targets on drug stocks: Club holdings Eli Lilly (LLY) to $408 per share from $412 and Johnson & Johnson (JNJ) to $174 from $173. Also, Pfizer (PFE) to $50 from $49 and Merck (MRK) to $91 from $92. Moderna (MRNA) soars 13% in the premarket after Merck opts to jointly develop mRNA-based cancer vaccine with the biotech. Atlantic Equities upgrades Kimberly-Clark (KMB) to overweight from neutral (buy from hold). See cost pressures easing; earnings-per-share on recovery on track; sees benefit of sector rotation and elevated investment. Stanley Black & Decker (SWK) downgraded to equal weight from overweight (hold from buy) at Morgan Stanley. Analysts expect cyclical strength to fade. UBS upgrades Norwegian Cruise Line (NCLH) to buy from neutral (hold). I like this. NCLH is best in show, which is what matters. UBS likes Royal Caribbean (RCL), too. Piper Sandler cuts Yeti (YETI) price target to $48 per share from $76 but keeps overweight (buy) rating. Still sees upside. The stock closed Tuesday at $30. JPMorgan upgrades drive-thru coffee chain Dutch Bros (BROS) to overweight from neutral (buy from hold). Sees labor costs now ebbing. Dutch Bros winner in stable gasoline. Deutsche Bank lowers price targets on all asset gatherers: BlackRock (BLK), Blackstone (BX) and KKR (KKR). Morgan Stanley lowers chemical giant Dow Inc. (DOW) price target to $54 per share from $60. Benchmark cuts DraftKings (DKNG) price target to $23 per share from $30. UBS lowers Tractor Supply (TSCO) price target to $215 per share from $220. Keeps neutral (hold) rating. (Jim Cramer's Charitable Trust is long PG, QCOM, LLY and JNJ. See here for a full list of the stocks.) 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.

Traders on the floor of the NYSE Sept. 30, 2022.

Source: NYSE

What I am looking at Wednesday, Oct. 12, 2022

U.S. stock futures lose some steam as bond yields rise after the government says producer prices in September were hotter than expected. There's nothing good here. Market still expects a fourth straight 75-basis-point interest rate hike at the Federal Reserve's meeting next month. Thursday, we get the latest read on consumer prices.
PepsiCo (PEP) jumped more than 2% in the premarket after reporting better-than-expected quarterly earnings and revenue and raises guidance. Starting to see turn in costs. Revenue growth 16%. Case volumes up. Taking share everywhere, especially in Frito and Gatorade. Growing everywhere in major brands. Big change: Backing big categories no longer niche items. Affordable luxury.