Every weekday, CNBC Investing Club’s Jim Cramer delivers his Homestretch, an actionable afternoon update, in time for the final hour of Wall Street’s close. Stocks were on pace to close higher on Monday after a volatile session for both stocks and bonds. The 10-year Treasury yield again approached 4.5%. Continuing on from the second quarter, mega-tech stocks continued to weigh on the S&P 500, with club picks Apple up more than 2.5%, Amazon up more than 2% and Microsoft up roughly 1.5%. But average stocks fared worse, with the S&P 500 Equal Weight Index dropping nearly 1% during the session. Monday marked the start of Wall Street’s third quarter, raising hopes for market strength like we saw in the first half of 2024. DOWNGRADE: We cut Estée Lauder to a Buy rating of 1 from 2 and lowered our price target to $140 from $162.The price target is just below the current consensus of $148 after a string of negative data over the weekend. First, there was Nike’s earnings report, which was pessimistic about China. Management said quarterly results, excluding timing benefits, fell short of plan. Nike lowered its Greater China outlook, pointing to a promotionally-heavy environment. Then there was the negative update from L’Oreal CEO Nicolas Hieronymus last Friday at a JP Morgan investor event. The CEO said globally, the beauty market is growing between 4.5% and 5%, slightly below previous expectations. The main reason for the downturn is the lack of growth in the Chinese beauty market, which Hieronymus said is “pretty bleak right now” as a recovery has not materialized. Estee Lauder YTD Mountain Estee Lauder YTD You could argue the following: (1) With Estee Lauder’s stock priced at such low levels, much of this decline may already be priced in. (2) This is a special situation, as the company has said it is getting out of overstocking and implementing a profit recovery plan to improve margins. Until now, I would have thought these two factors would be enough to stabilize the stock. Unfortunately, that hasn’t happened as expected. If the latest signs show that the Chinese market is still struggling to recover, we should hold off on adding until we see more evidence that this recovery is taking shape. Next up: There are no major earnings reports after Monday’s close. But this is a hiring week, with a ton of data released in the government’s Job Openings and Labor Turnover Survey (JOLTS) on Tuesday and ending with the Labor Department’s monthly employment report on Friday. (See here for a complete list of Jim Cramer’s Charitable Trust stocks.) Subscribers to Jim Cramer’s CNBC Investment Club get trade alerts before Jim makes any trades. Jim will wait 45 minutes after sending a trade alert before buying or selling shares in the charitable trust’s portfolio. If Jim talks about a stock on CNBC television, Jim will wait 72 hours after issuing a trade alert before executing the trade. The Investment Club information above is subject to our Terms of Use and Privacy Policy and Disclaimer. Receipt of any information provided in connection with the Investment Club does not create any fiduciary duty or liability, nor can it be guaranteed any particular result or benefit.
Every weekday, CNBC Investing Club with Jim Cramer releases Homestretch, an actionable afternoon update, just in time for the final hour of trading on Wall Street.
