With the market stumbling, we're hunting for quality stocks to buy into weakness

Published Wed, Apr 10 20242:34 PM EDT

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.) Stocks stumble: The market struggled Wednesday following the release of the March consumer price index (CPI) report. The 10-year Treasury yield surged as high as 4.55%, from 4.35%, after the inflation proxy report was a touch hotter than expected. Large upward moves in rates tend to put the stock market in a tailspin. The report raises concerns that the Federal Reserve may be in no position to cut interest rates at its June meeting. With the S & P 500 working on its fifth down session out of the last eight, we are searching for stocks to buy into the weakness. "Always looking to buy something on a down day," adds Jim Cramer. " Abbott Lab s? We like it, but not down enough from our last buy. Bullpen name Nucor ? Not down enough. Would like to see it down 7 to 10 dollars." What goes down when rates go up? When interest rates go up, the groups in the blast zone are real estate and utilities, stocks tied to housing, anything that needs to be bought with financing like cars or solar panels, and companies with weaker balance sheets because higher rates make it more expensive and challenging for them to refinance their debt. Even if the environment gets a little tougher because of higher rates, it doesn't mean we want to abandon ship on quality companies that are improving themselves. As long as the economy is strong — and last Friday's jobs report indicated it is — our investment approach has not changed because the timing of the first cut in rates may be delayed. That's why we are looking for weakness to buy a stock like Stanley Black & Decker , which is tied to home remodeling projects. But maybe not just yet. "The shellacking in homebuilders draws me to Stanley Black & Decker but it, too, is not down enough and won't help our basis," Cramer said. Quick hits: The healthcare sector is performing in the middle of the pack relative to other sectors on Wednesday, but the group has had a rough April. Only the real estate sector has been worse. There are plenty of quality companies in healthcare, so we're taking a look at the group to see what could be worth buying. "I'm trying to figure out if Medtronic or Johnson & Johnso n, both with lots of AI, are interesting. Would like to see them lower." Apple remains at a key level. Last Thursday, Cramer went Off the Charts with technician Carolyn Boroden, who said Apple could find a floor somewhere from $164 to $169. We checked in with Boroden and she now says the floor is $164 to $167. Cramer points out that Apple's Fibonacci level is being tested again. "It has to hold here." (Boroden and other technical analysts use Fibonacci ratios to spot patterns that can signal when a stock or other security could shift directions.) Another stock that may be trying to find a floor is Palo Alto Networks . We added to our position on Monday. Cramer thinks the stock is "truly trying to bottom." Up next: The producer price index (PPI) on Thursday gives us another view into inflation. Beer maker Constellation Brands reports earnings before the bell. We want to hear how management is thinking about shelf space gains from the spring season reset, which could help pick up extra market share. We don't expect anything positive to come from the company's wine and spirits business, which represents less than 20% of sales, but hope fixes are on the way thanks to a new leadership change. (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.

Traders work on the floor of the New York Stock Exchange during afternoon trading on April 09, 2024 in New York City.

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