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.)
Momentum fading?: The S&P 500 is on track for slight losses Monday, but stocks are well off their lows of the session. Concerns about Friday's intraday reversal in leading artificial intelligence chipmaker Nvidia — which traded 5% higher before closing down 5% — extended into the new week. Many observers are arguing that some pockets of the market, mainly in the AI trade, have moved too far, too fast and are ripe for pullbacks. Nvidia, a longtime Club holding, fell 1.5% Monday.
Last week, we cautioned around what we perceived as toppy behavior, contending it would be healthy for the market to shakeout some of its excess froth. Given these concerns, we would not be surprised to see more choppiness ahead and pullbacks like we're seeing Monday play out more frequently over the next few weeks. That may create better buying opportunities for those with patience and willing to pass on the "first dip."
Sectors leading: Materials is the top-performing sector Monday. Some of that is tied to Club holding Linde, which climbed more than 1% on news it will be added to the Nasdaq 100 index later this month. However, the strength is mostly in some of the group's laggards like Albemarle, Newmont, FMC Corp. and International Flavors & Fragrances. The No. 2 performing sector Monday is consumer staples, and the move higher in the group makes sense to us. If investors are fearing momentum and selling stocks with extended, parabolic charts, it's likely some of that money will find its way into more stable names that pay solid dividends. Club consumer staple Procter & Gamble, which was upgraded to buy from hold by Truist, added about 0.7%. Energy is higher despite being weighed down by EQT Corp.'s acquisition-related decline.
Sectors lagging: Meanwhile, industrials on Monday are at the bottom of the S&P 500. Some of this underperformance has to do with Boeing falling on reports of a new Department of Justice probe into the Alaska Airlines door blowout, but there's also profit-taking afoot in recent winners like housing-linked Builders FirstSource and Howmet Aerospace. Tech also is having a rough day as the recent rallies in semiconductor stocks like Nvidia and software names lose steam.
Later: Earnings from tech giant Oracle will give us the latest read on the data center market and cloud spending environment. Tuesday is a busy day with earnings from shoe maker On Holding and retailer Kohl's, as well as the the February consumer price index report before the bell, which will provide the latest look at U.S. inflation. Meanwhile, we'll be keeping an eye on Club holding GE Healthcare's appearance Tuesday at Oppenheimer's MedTech and Services conference.
(See here for a full list of the stocks in Jim Cramer's Charitable Trust.)
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