Good news is bad news again. At least as far as the stock market is concerned. Wall Street concluded an already softer week with a thud Friday after the December jobs report came in much hotter than expected. The S & P 500 lost 1.54% in the session and 1.94% for the week. The Nasdaq Composite and the Dow Jones Industrial Average, meanwhile, also fell sharply Friday and ended the week down 2.34% and 1.86%, respectively. The jobs report sent bond yields spiking , as investors reconsidered the likelihood of additional Federal Reserve interest cuts this year if the U.S. economy is as strong as the December employment data suggests. “When I see this number, what I say to myself is … would you prefer earnings to be good? Because this is an earnings-are-good [report],” Jim Cramer said Friday. “Or would you prefer rate cuts? Any time I can get earnings to be good, I vastly prefer that to rate cuts, because rate cuts don’t necessarily translate into [earnings per share].” The conventional wisdom on Wall Street is that higher interest rates are bad for equities , at least initially, because it changes a key input into valuation models for individual stocks and makes bonds relatively more attractive as an investment. Understanding this dynamic, it’s no surprise that traders reacted to the jobs report the way they did Friday. But, as fundamentals-focused investors at the Club, our calculus is different. “What’s really bad for stocks is unemployment, is a recession. These [jobs] numbers are so far away from recession, the only thing I can conclude is that the Fed got it wrong” in cutting rates again in December, Jim argued, referring to the Fed’s third reduction since September. “But that doesn’t mean, necessarily, that CEOs are going to get it wrong, that businesses are going to get it wrong,” he continued. “We do not have a number that is going to wipe out companies. We have a number that is going to keep this economy afloat, no matter what the Fed does.” We made a trade into Friday’s weaker market, adding to our position in Home Depot for the first time since Dec. 19. It capped off a busy week of moves — seven trade alert stories about six stocks — despite having one fewer day of trading on Thursday, when the U.S. market was closed in observance of former President Jimmy Carter’s state funeral in Washington. Our week of trades Monday, Jan. 6 Bought 25 shares of Goldman Sachs Sold 150 shares of Nextracker Tuesday, Jan. 7 Bought 82 shares of Goldman Sachs and exited our stake in Morgan Stanley Sold 150 shares of Nextracker Wednesday, Jan. 8 Sold 150 shares of Palo Alto Networks Bought 25 shares of BlackRock Friday, Jan. 10 Bought 25 shares of Home Depot Among the lowlights in recent days was Constellation Brands’ quarterly earnings report Friday, which sent shares sliding 17% in the session and firmly entrenched the stock as our worst-performing name for the week. We downgraded the stock to a 3 rating , meaning sell into strength. Nvidia also was near the bottom of the weekly scoreboard, losing almost 6%, despite closing at a record high Monday ahead of CEO Jensen Huang’s keynote address at the annual CES conference. We loved what we heard from Huang on Nvidia’s long-term AI strategy and were unmoved the market’s sour short-term reaction. On the other hand, Texas-based driller Coterra Energy was our No. 1 performer, adding 5.8% amid a strong week for natural gas and oil futures , the two commodities that most influence its stock price. Recently disappointing GE Healthcare , which caught an upgrade to buy from hold at Jefferies on Wednesday, was hot on Coterra’s heels, adding 5.3% in its best week since February of last year. It’s going to be a busy week ahead for both economic and corporate data. The influential JPMorgan Healthcare Conference also takes place in San Francisco. Jim will be in attendance. In the early part of the week, we’ll hear from executives at GE Healthcare and fellow portfolio holdings Danaher , Eli Lilly and Bristol Myers Squibb . Economy The big event is Wednesday morning’s consumer price index for December, which gives investors a critical look at inflationary pressures in the U.S. economy. Wall Street expects to see a 2.9% year-over-year increase and a 0.3% month-over-month rise , according to estimates compiled by Dow Jones. Excluding volatile food and energy prices, so-called core CPI is expected to be up 3.3% annually and 0.2% on a monthly basis. The December producer price index is due out a day earlier, on Tuesday morning, providing an update on wholesale inflation. The CPI gets more attention because it captures the prices that U.S. shoppers are being asked to pay, but the PPI has its role, too. It’s seen as a leading indicator for future CPI reports because it measures various input costs for businesses, offering clues on whether they will need to raise prices in the future protect their profit margins. As of Friday, economists expect a 0.3% month-over-month increase in both the headline and core PPI, according to Dow Jones. With Friday’s jobs report forcing investors to rethink expectations on future Fed cuts, the PPI and CPI reports may be even more pivotal than usual. Hotter-than-projected inflation data could, at least in the short term, solidify a more hawkish central bank. Among the secondary economic reports are the Commerce Department’s monthly look at retail sales on Thursday morning, which are expected to be up 0.4%, and the Fed’s update on industrial production and capacity utilization before the bell Friday. The retail data will add to our understanding of U.S. consumer behavior during the key holiday shopping period, while the Fed’s report will provide insight into production at factories, mines and utilities. Industrial production is projected to rise 0.3% while capacity utilization is forecast to be 77%, according to the Dow Jones consensus. On Friday morning, the Commerce Department also will release its report on new residential construction in December, known as housing starts. With housing inflation remaining sticky, this data is important because it reflects new homes that will eventually be on the market to address the mismatch between supply and demand in many parts of the U.S. Economists expect housing starts of 1.32 million, according to Dow Jones. Earnings A trio of portfolio companies are set to report fourth-quarter results in the week ahead — all on Wednesday morning. We’ll hear from Wells Fargo , Goldman Sachs and BlackRock , as financials typically make up the first wave of companies reporting each earnings season. Goldman and BlackRock will be reporting for the first time as portfolio stocks. A potential common topic across all three conference calls is the regulatory environment under President-elect Donald Trump . The incoming administration is widely to pursue a more hands-off approach toward the financial industry, which is one reason why bank stocks were such strong performers in the wake of the Nov. 5 election. Some of those gains have been given back amid the broader market retreat since early December. Still, the KBW Bank Index is up 3.3% since the election while the S & P 500 is up less than 1% after Friday’s sell-off. The regulatory shift hopefully means that the Federal Reserve will soon lift the asset cap on Wells Fargo, which has been in place for almost seven years and stymied the bank’s growth throughout that time. On Wednesday’s earnings call, analysts will likely ask CEO Charlie Scharf for his latest expectations on the removal of the unprecedented penalty handed down in response to scandals under previous leadership. With Trump in the White House, the Department of Justice and Federal Trade Commission also are anticipated to be less aggressive on antitrust enforcement than the Biden administration — a good thing for mergers and acquisitions activity. While we’re already seeing a pickup in dealmaking, Goldman Sachs CEO David Solomon should provide additional color on where the investment banking giant expects it to go from here. The impending M & A wave is why we took a stake in Goldman last month, believing it’s better positioned to benefit than now-former Club name Morgan Stanley because investment banking represents a bigger share of its revenue pie. Wells Fargo has been building up its business in this area , though it’s still a much smaller player than Goldman. Once the asset cap is gone, Wells Fargo should be able to invest even more in this growth priority. Analysts expect Wells Fargo to report earnings of $1.35 per share on revenues of $20.59 billion for the three months ended Dec. 31, according to LSEG. Wells Fargo’s guidance on net interest income — the difference between what it makes on loans and what it pays on deposits — and corporate expenses also will be important. For Goldman Sachs , the current Wall Street consensus is fourth-quarter revenue of $12.25 billion and earnings per share of $8.17, according to LSEG. When Goldman reported in October, analysts asked Chief Executive Solomon about his plan to improve the bank’s return on equity to at least 15% on a more regular basis, as well as the competitive landscape for its trading business. As mentioned, the M & A environment figures to be a major focus of Goldman’s earnings call this time around. BlackRock is expected to report quarterly revenue of $5.52 billion and earnings per share of $11.22, LSEG data shows. Below those headline numbers, net inflows is a key metric to watch for BlackRock, the world’s largest asset manager. BlackRock ended the third quarter with a record $11.48 trillion in assets under management, up from $10.65 trillion in the April-to-June period. The more assets that BlackRock gathers, the more fees that it can generate. From there, staying disciplined on costs helps translate to improved bottom-line performance. On the call, we’ll be listening to CEO Larry Fink’s commentary on the integration of Global Infrastructure Partners after that acquisition closed Oct. 1 . BlackRock’s roughly $12 billion deal to buy HPS Investment Partners — announced last month as part of a push into the hot private credit market — is likely to be a topic of discussion. We’re upbeat on the move and cited it in our decision to add to our BlackRock position on Wednesday. Week ahead Monday, Jan. 13 Bristol Myers Squibb presents at JPMorgan Healthcare Conference at 10:30 a.m. ET. After the close: KB Home (KBH) Tuesday, Jan. 14 Producer price index at 8:30 a.m. ET Danaher presents at JPMorgan Healthcare Conference at 2:15 p.m. ET. Eli Lilly and GE Healthcare present at JPMorgan Healthcare Conference at 5:15 p.m. ET. Wednesday, Jan. 15 Consumer price index at 8:30 a.m. ET Before the bell: Wells Fargo (WFC), Goldman Sachs (GS), BlackRock (BLK) , Citigroup (C), JPMorgan Chase (JPM), Bank of NY Mellon (BK) After the bell: Synovus (SNV), Concentrix (CNCX) Thursday, Jan. 16 Retail sales at 8:30 a.m. ET Before the bell: Taiwan Semiconductor Manufacturing Co. (TSM), UnitedHealth Group (UNH), Bank of America (BAC), Morgan Stanley (MS), PNC Financial (PNC), US Bancorp (USB) After the close: JB Hunt (JBHT) Friday, Jan. 17 Housing starts at 8:30 a.m. ET Industrial production and capacity utilization at 9:15 a.m. ET Before the bell: SLB (SLB), Regions Financial (RG), Fastenal (FAST), Truist (TFC), Citizens Financial (CFG), State Street (STT) (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.
A person shops at a Whole Foods Market grocery store on December 17, 2024 in New York City.Â
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Good news is bad news again. At least as far as the stock market is concerned.
