Tag Archives: Wells Fargo & Co

Business

Treasury yields fall as traders track economic data, Fed remarks

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U.S. Treasury yields slipped Wednesday as investors continue to assess the economic outlook amid rising recession fears.

At around 5:48 a.m. ET, the yield on the benchmark 10-year Treasury note was down at 3.173%, while the yield on the 30-year Treasury bond dropped to 3.285%. Yields move inversely to prices.

As the second quarter draws to a close on Thursday, concern over a slowing economy and aggressive interest rate hikes from the Federal Reserve continue to dominate market sentiment.

An attempted rally for risk assets fizzled out on Tuesday after a disappointing consumer confidence reading, which came in at 98.7, below Dow Jones’ consensus estimates of 100.

The Conference Board’s one-year ahead inflation expectations hit a record high of 8.0%, exceeding the 7.7% seen in June 2008, while the Richmond Fed’s manufacturing index came in at -19, its lowest since May 2020 and well below consensus expectations of -7.

Fed Chairman Jerome Powell is due to give a speech at the European Central Bank forum at 9 a.m. ET. Powell acknowledged in a testimony to the Senate banking committee last week that steep rate hikes may tip the U.S. economy into recession, but reiterated the central bank’s commitment to reining in inflation.

On the economic data front, final first-quarter GDP figures are due at 8:30 a.m., along with PCE prices, corporate profits and consumer spending data.

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Business

Here’s what a 3% yield on the 10-year Treasury means for your money

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d3sign | Moment | Getty Images

As the yield on the 10-year U.S. Treasury pushes ever closer to 3% — a symbolic level not seen since late 2018 — financial analysts have described how it could affect people’s finances in a number of ways.

Last week, the 10-year rate hit 2.94%, its highest point in more than three years. That’s also a big jump from where the 10-year started the year, at around 1.6%. It’s significant because it is considered the benchmark for rates on all sorts of mortgages and loans.

Soaring inflation, exacerbated by the Russia-Ukraine war, has led to concerns that this could hurt consumer demand and drag on economic growth. In addition, there are fears that the Federal Reserve’s plan to curb rapidly rising prices by aggressively hiking its own funds rate and generally tightening monetary policy could also tip the economy into a recession.

As a result, investors have been selling out of bonds, which pushes yields higher as they have an inverse relationship. So what would it mean for your money if that rate hits 3%?

Loans and mortgages

One consequence of rising yields is higher borrowing costs on debt, such as consumer loans and mortgages.

For instance, Schroders Investment Strategist Whitney Sweeney told CNBC via email that the effect of a higher 10-year yield on college loans will be felt by those students taking federal loans for the upcoming school year.

“The rate is set by Congress who approves a margin applied to the May 10-year treasury auction,” she said, but highlighted that the rate is currently zero for existing federal student loans due to pandemic relief measures.

In addition, Sweeney said private variable-rate student loans would be expected to rise as the 10-year Treasury yield climbs.

Sweeney said mortgage rates tend to move in line with the 10-year Treasury yield. “We’ve already seen a significant uptick on mortgage rates since the start of the year,” Sweeney added.

Bonds

Meanwhile, ING Senior Rates Strategist Antoine Bouvet told CNBC via email that higher interest rates on government debt would also mean higher returns on savings placed in fixed-income securities.

“This also means pensions funds have less difficulties investing to pay future pensions,” he added.

In terms of stock market investments, however, Bouvet said that higher bond interest rates would likely make it a more challenging environment for sectors with companies that tend to hold more debt. This is something that has been associated with technology companies and part of the reason this sector has seen more volatility recently.

Similarly, Sweeney pointed out that when yields were closer to zero, investors had little choice but to invest in riskier assets such as stocks to generate returns.

But as the 10-year Treasury yield approaches 3%, she told CNBC via email that both cash and bonds were becoming “more attractive alternatives as you are getting paid more without taking on as much risk.”

Sweeney said that shorter-dated bonds, in particular, can look more attractive, given this is where significant interest rate hikes have already been priced in.

Stocks

Wells Fargo Senior Macro Strategist Zach Griffiths told CNBC on a phone call that it was also important to understand what higher yields would mean for companies’ future cash flows, when looking at investing in stocks.

He said that one way to value stocks was to project forward the level of free-cash flow the company is expected to generate. This is done by using a discount rate, which is a type of interest rate, informed by Treasury yields. Discounting back to the current cash-flow level comes up with an intrinsic value for a company.

“When the rate used to discount those future cash flows back to the present is low, then the present value of those cash flows (i.e. intrinsic value of the company) is higher than when rates are high due to the time value of money,” Griffiths explained via email.  

Nevertheless, Griffiths said stocks had broadly managed to withstand the uncertainty presented by higher inflation, geopolitical tensions and a more hawkish tone on policy from the Fed.

Griffiths also highlighted that a 3% yield on the 10-year Treasury yield was very much a “psychological level,” given it wouldn’t represent much of an increase from the current rate. He said Wells Fargo expected that the 10-year yield could finish the year above 3%, and didn’t rule out it hitting 3.5% or 3.75%, but stressed that wasn’t the firm’s “base case.”

Check out: How to protect your savings as inflation soars

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Business

5 things to know before the stock market opens Monday, April 18

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Here are the most important news, trends and analysis that investors need to start their trading day:

1. Stock futures fall as the 10-year Treasury yield tops a 3-year high

Traders on the floor of the NYSE, April 14, 2022.

Source: NYSE

2. BofA issues stronger earnings as it releases reserves for soured loans

A woman is reflected in a puddle as she passes a Bank of America branch in New York’s Times Square.

Brendan McDermid | Reuters

Bank of America, the last of the major banks to report earnings, on Monday delivered a better-than-expected 80 cents per share profit on revenue of $23.33 billion. BofA’s decision to release $362 million in loan-loss reserves was in contrast to JPMorgan Chase, which disclosed last week that it opted to build reserves by $902 million. JPMorgan said profit also slumped due to losses tied to Russia sanctions. Goldman Sachs, Morgan Stanley and Citigroup each topped expectations with stronger-than-expected trading results. Wells Fargo missed on revenue as mortgage lending declined.

3. Elon Musk’s tweet suggests an appeal directly to Twitter shareholders

Elon Musk posted a tweet Saturday, saying “Love Me Tender,” days after making an unsolicited $43 billion cash offer to buy Twitter. After a TED talk Thursday, Musk hinted at the possibility of a hostile bid, in which he would bypass the social media company’s board and put the offer directly to shareholders.

The tweet seemed to imply Musk, the world’s richest person and CEO of both Tesla and SpaceX, might seek to buy shares from investors in what’s called a tender offer. Twitter on Friday adopted a “poison pill” to limit Musk’s ability to raise his stake in the company. Shares of Twitter rose more than 3.5% in the premarket.

4. China’s first-quarter GDP beats estimates despite Covid lockdowns

A health worker wears a protective suit as he disinfects an area outside a barricaded community that was locked down for health monitoring after recent cases of COVID-19 were found in the area on March 28, 2022 in Beijing, China.

Kevin Frayer | Getty Images

China’s first-quarter gross domestic product grew a faster-than-expected 4.8% despite the impact of Covid lockdowns in March. Beginning last month, China struggled to contain its worst Covid outbreak since the initial phase of the pandemic in 2020. Three people have died as of Sunday, officials of locked-down Shanghai said, attributing the fatalities to preexisting health conditions. Shanghai began a two-stage lockdown and mass virus testing in late March that was supposed to stop after just over a week later. But authorities have yet to set an end date.

5. Russian strikes kill at least 7 people in Lviv, Ukrainian officials say

Dark smoke rises following an air strike in the western Ukrainian city of Lviv, on April 18, 2022.

Yuriy Dyachyshyn | AFP | Getty Images

Russian missiles hit Lviv in western Ukraine on Monday, killing at least seven people, Ukrainian officials said, as Moscow’s troops stepped up strikes on infrastructure in preparation for an all-out assault in the east. Mariupol, the besieged eastern city, has refused Russia’s demand to surrender. The mayor of Mariupol said last week that 10,000 civilians have died there. “The targeting of populated areas within Mariupol aligns with Russia’s approach to Chechnya in 1999 and Syria in 2016,” the U.K. Ministry of Defense said in an intelligence update.

— CNBC’s Hannah Miao, John Melloy, Sarah Min, Tanaya Macheel, Hugh Son, Evelyn Cheng, Natasha Turak and Ted Kemp as well as Reuters and The Associated Press contribute to this report.

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Business

Conagra, Levi Strauss, Rite Aid and others

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Check out the companies making headlines before the bell:

Conagra (CAG) – The food producer’s stock tumbled 5.5% in the premarket after issuing a weaker-than-expected forecast for the fiscal year ending in May. Conagra’s results are being hit by higher transportation and raw materials costs.

Levi Strauss (LEVI) – Levi Strauss beat estimates by 4 cents with an adjusted quarterly profit of 46 cents per share, and the apparel maker’s revenue also topped Wall Street forecasts. The company saw strong demand for its jeans, tops and jackets while successfully raising prices and cutting down promotions. Levi Strauss rose 3% in premarket trading.

HP Inc. (HPQ) – HP is surging 15.2% in premarket trading following news that Warren Buffett’s Berkshire Hathaway took an 11.4% stake in the maker of personal computers and printers.

Rite Aid (RAD) – The stock tumbled 18.3% in premarket action after Deutsche Bank downgraded the drugstore operator to “sell” from “hold.” Deutsche Bank said Covid hastened the decline of the retail pharmacy segment, and there’s a possibility that Rite Aid may not be able to generate enough earnings to continue as an operating company.

Wayfair (W) – Wayfair slid 4.1% in the premarket after Wells Fargo downgraded the stock to “underweight” from “equal weight.” Wells Fargo said the high-end furniture retailer will be hurt by waning demand, overly optimistic consensus estimates and other headwinds.

Rent the Runway (RENT) – Rent the Runway stock jumped 3.9% in the premarket after the fashion rental company announced a price hike for its subscribers.

CDK Global (CDK) – The provider of automotive retail technology agreed to be bought by Brookfield Business Partners for $54.87 per share in cash. The price represents a 12% premium over CDK’s Wednesday closing price.

SoFi Technologies (SOFI) – The online personal finance company’s shares slid 5.1% in the premarket after cutting its full-year outlook. The cut follows the White House announcing a student loan payment moratorium will be extended.

JD.com (JD) – JD.com announced that founder Richard Liu has left the chief executive officer position and President Xu Lei will take over as the Chinese e-commerce company’s CEO. Liu will remain as chairman. JD.com fell 1.1% in the premarket.

Teladoc Health (TDOC) – The provider of virtual doctor visits saw its stock gain 1.5% in premarket action after Guggenheim initiated coverage with a “buy” rating. Guggenheim said health care access is moving more toward digital interactions and that Teladoc has a broader service portfolio than other providers.

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Business

JPMorgan, Wynn Resorts and more

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Spencer Platt | Getty Images

Check out the companies making headlines in midday trading.

Casino stocks — Las Vegas Sands and Wynn Resorts saw their shares jump more than 11% and 7%, respectively, after the Macau government said the number of casinos allowed to operate there would remain limited at six. Licenses of the current operators – which include Wynn Macau, Sands China and MGM China – are set to expire this year. Shares of MGM Resorts slipped slightly.

JPMorgan Chase — Shares of the major bank fell more than 5%, dragging down the major equity averages. The sell-off came after the firm posted its smallest quarterly earnings beat in nearly two years and the lender’s chief financial officer lowered guidance on companywide returns. CFO Jeremy Barnum said on a conference call that management expected “headwinds” of higher expenses and moderating Wall Street revenue.

Wells Fargo — The bank stock jumped more than 3% after the company posted quarterly revenue that exceeded analysts’ expectations and a significant jump in profit. Results were helped by a $875 million reserve release that the bank had set aside during the pandemic to safeguard against widespread loan losses.

Citigroup — Citi shares lost 2.5% despite the company reporting a beat on quarterly earnings and revenue. However, the bank also reported net income for the latest quarter dropped 26% to $3.2 billion, citing an increase in expenses.

BlackRock — Shares of the asset manager fell 2.6% after the company reported a quarterly revenue miss of $5.11 billion, versus expectations of $5.16 billion, according to FactSet’s StreetAccount. The company beat earnings estimates, however, and grew its assets under management to above $10 trillion.

Monster Beverage — Shares of Monster Beverage fell 4.5% a day after the company revealed plans to acquire CANarchy Craft Brewery Collective, a craft beer and hard seltzer company, for $330 million in cash. The deal would bring brands such as Jai Alai IPA, Florida Man IPA, Wild Basin Hard Seltzer and others to the Monster beverage portfolio.

Boston Beer Company — The alcoholic beverage company’s shares slid more than 9% a day after the brewer cut its annual earnings outlook, citing high costs related to supply chain issues and waning growth of its hard seltzer brand Truly.

Walt Disney Co — Disney shares dropped 3.8% after Guggenheim downgraded the stock to neutral from buy, citing slowing profit growth in streaming and parks. The firm also cut its price target on Disney to $165 from $205.

Sherwin-Williams — The paint company saw its shares fall nearly 3% after it cut its full-year forecast, citing supply chain issues it expects will persist through the current quarter. Sherwin-Williams also said demand is still strong in most of its end markets.

Domino’s Pizza — Shares of Domino’s Pizza slid 2.8% after Morgan Stanley downgraded the restaurant chain stock to an equal weight rating. “DPZ still embodies many of the characteristics of a great long term growth compounder, we see limited justification for further multiple expansion, especially as DPZ’s sales growth will likely being to normalize after experiencing substantial Covid (and stimulus) benefits in 20/21,” Morgan Stanley said.

 — CNBC’s Yun Li and Hannah Miao contributed reporting

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American Airlines, Kohl’s, Lucid Group and more

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A jet from American Eagle, a regional branch of American Airlines (AA), takes off past other AA aircraft at Ronald Reagan Washington National Airport in Arlington, Virginia, December 3, 2021.

Chris Helgren | Reuters

Check out the companies making headlines in midday trading.

Airlines — Airline stocks rose on Monday as stocks linked to the recovering economy boosted the major averages. American Airlines rose 10%, United Airlines added nearly 11%, and Delta Air Lines popped 8.6%. Alaska Air Group rallied 7%.

Cruise line and casino stocks — Norwegian Cruise Line rose 11% and Carnival rallied 10.4% as reopening plays charged higher. Las Vegas Sands gained more than 9%. MGM Resorts and Wynn Resorts rose 6.8% and 7.6%, respectively.

Kohl’s — Shares of the retailer rallied 7.6% following news that activist investor Engine Capital is recommending that Kohl’s consider either a sale of the company or a separation of its e-commerce business. 

GCP Applied Technologies — Shares of GCP Applied Technologies soared more than 16% after the maker of specialty construction chemicals agreed to be acquired by French construction company Saint-Gobain for $32 per share in cash, or about $32 billion. 

Lucid Group —Shares of the electric vehicle start-up dropped about 7.3% after news that the company received a subpoena on Friday from the Securities and Exchange Commission “requesting the production of certain documents related to an investigation.” Lucid is the latest EV start-up to go public via a SPAC deal to be investigated by the SEC.

Wells Fargo — Shares of Wells Fargo rallied more than 3% after Morgan Stanley upgraded the stock to overweight from equal weight. Morgan Stanley said Wells is the most asset-sensitive stock in its coverage and higher fed funds futures warrant an upgrade. The firm named Wells a top 2022 pick.

Spirit Airlines — Shares of the discount airline rallied 9% after Evercore ISI upgraded Spirit to outperform from in line. Evercore said in its upgrade that it sees “see strategic optionality as company execution and demand improve.”

MicroStrategy – Shares of the business analytics software company dropped more than 5% on the heels of bitcoin’s sell-off over the weekend. MicroStrategy holds billions of dollars’ worth of bitcoin on its balance sheet, so the company’s stock is sensitive to fluctuations in the world’s largest cryptocurrency’s price.

Alibaba — The Chinese internet giant’s shares jumped 7.3% after the company announced a reorganization of its international and domestic e-commerce businesses. Alibaba also said it will replace its CFO.

Boston Beer — Shares of the beverage maker rose 7.6% after Cowen upgraded Boston Beer to market perform from underperform. Cowen said in its upgrade of the beer company that the valuation re-rating is likely complete.

— with reporting from CNBC’s Yun Li, Pippa Stevens and Hannah Miao.

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Business

5 things to know before the stock market opens Monday, Oct. 11

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Here are the most important news, trends and analysis that investors need to start their trading day:

1. Wall Street set to start week lower as oil hits 7-year highs

Traders work on the floor of the New York Stock Exchange (NYSE) on October 04, 2021 in New York City.

Spencer Platt | Getty Images

2. Oil jumps to over $82 per barrel as global energy crisis persists

U.S. oil prices, measured by West Texas Intermediate crude, surged 3.5% on Monday to more than $82 per barrel after rising nearly 4.6% last week. Gasoline prices at the pump were also at seven-year highs, around $3.27 per gallon, according to AAA. Crude prices extended multiweek gains as an energy crisis gripping major global economies showed no sign of easing. The energy crunch has been due to a pickup in business activity and restrained supplies from international producers. However, U.S. drillers were taking advantage of the increases, adding five new oil rigs last week, the fifth straight weekly increase.

3. Major banks’ earnings lead third-quarter reporting this week

A combination file photo shows Wells Fargo, Citibank, Morgan Stanley, JPMorgan Chase, Bank of America and Goldman Sachs.

Reuters

4. Yellen warns on debt ceiling as House gets set to vote on deal

A view of the U.S. Capitol during morning rush hour on Wednesday morning October 6, 2021 in Washington, DC.

Drew Angerer | Getty Images

Treasury Secretary Janet Yellen said Sunday there’s an “enormous amount at stake” after the Senate approved only a short-term extension of the debt ceiling, again setting up the potential for default in December if lawmakers are unable to make another deal. “A failure to raise the debt ceiling would probably cause a recession,” Yellen reiterated on the ABC program “This Week.” The House, which had been scheduled to be out this week, is set to return Tuesday to pass the measure. Senate GOP leader Mitch McConnell sent a warning Friday to President Joe Biden, saying Republicans “will not provide such assistance again.”

5. Southwest cancels about 2,150 flights, blaming weather and staffing

A Southwest Airlines Boeing 737 MAX 8 aircraft is pictured in front of United Airlines planes, including Boeing 737 MAX 9 models, at William P. Hobby Airport in Houston, Texas, March 18, 2019.

Loren Elliott | Reuters

Southwest Airlines canceled more than 1,800 flights this weekend, disrupting the travel plans of thousands of customers and stranding flight crews. The carrier blamed the meltdown on a combination of bad weather as well as shortages in air traffic controllers and its own staff. Other airlines canceled relatively few flights. Southwest, which did not comment on the disparity, has canceled 349 flights, 9% of its schedule, on Monday, according FlightAware. On Saturday, union officials said Southwest’s decision this week to join its rivals in requiring Covid vaccines for workers is contributing to distractions for aviators.

— Reuters and NBC News contributed to this report. Follow all the market action like a pro on CNBC Pro. Get the latest on the pandemic with CNBC’s coronavirus coverage.

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Business

Merck, Lordstown Motors, Coty, Zoom and others

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Check out the companies making headlines before the bell:

Merck (MRK) – Merck shares surged 7.5% in the premarket after it announced that its experimental Covid-19 pill cut the risk of death and hospitalization by 50% in a late-stage study. Merck plans to file for emergency use authorization as soon as possible.

Lordstown Motors (RIDE) – Lordstown struck a deal to sell its Ohio plant to Taiwan’s Foxconn for $230 million, with Foxconn taking over the manufacturing of Lordstown’s full-sized electric pickup truck. It was reported earlier this week that a deal between the two sides was near. Lordstown rallied 6.3% in premarket trading.

Coty (COTY) – The cosmetics company’s stock gained 2% in the premarket as it announced a deal to sell another 9% stake in its Wella beauty business to private equity firm KKR (KKR). In return, KKR will redeem about half its remaining convertible preferred shares in Wella, reducing Coty’s stake to about 30.6%. Coty had sold a 60% stake in Wella to KKR last December.

Zoom Video Communications (ZM) – Zoom and Five9 (FIVN) have terminated a nearly $15 billion deal by mutual consent. Zoom had struck a deal to buy the contact center operator, but it was rejected by Five9 shareholders. The two sides will continue a partnership that had been in place prior to the proposed transaction. Zoom jumped 4% in the premarket while Five9 slid 1.4%.

Walt Disney (DIS) – Disney and Scarlett Johansson have settled a lawsuit involving the “Black Widow” movie. Johansson had sued Disney over the release of the movie on the Disney+ streaming service at the same time it was debuting in theaters. Terms of the settlement weren’t disclosed.

Wells Fargo (WFC) – Wells Fargo will have to face a shareholder fraud lawsuit involving its attempt to rebound from years of scandals. A judge rejected the bank’s moved to have the suit dismissed, saying it was plausible that statements by various Wells Fargo officials about the recovery were false or misleading.

Exxon Mobil (XOM) – Exxon Mobil said in an SEC filing that higher oil and gas prices could boost third-quarter earnings by as much as $1.5 billion. Exxon profits have been improving amid the rising prices as well as cost cuts by the energy giant.

Nio (NIO) – Nio reported deliveries of 10,628 vehicles in September, a 126% increase over a year ago for the China-based electric vehicle maker. Nio added 1.8% in the premarket.

International Flavors (IFF) – The maker of food flavoring and cosmetic ingredients said Chairman and Chief Executive Officer Andreas Fibig plans to retire, although he’ll remain at the helm of the company until a successor is found. Shares added 2.5% in premarket action.

Jefferies Financial Group (JEF) – Jefferies reported a quarterly profit of $1.50 per share, beating the 99-cent consensus estimate, with the financial services company’s revenue also topping Wall Street forecasts. Jefferies saw its results boosted by a strong performance in its investment banking business. Jefferies gained 1.4% in the premarket.

MGM Resorts (MGM) – Susquehanna Financial downgraded MGM to “negative” from “neutral,” saying the DraftKings (DKNG) bid for British gambling company Entain weakens MGM’s prospects in the digital gaming and betting market.

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Business

Carnival, Nike, Match and more

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The Carnival Cruise Ship ‘Carnival Vista’ heads out to sea in the Miami harbor entrance known as Government Cut in Miami, Florida June 2, 2018.

RHONA WISE | AFP | Getty Images

Check out the companies making headlines in midday trading.

Carnival — Carnival shares rose 4% after the cruise line said voyages for the third quarter were cash flow positive and expects this to continue. Shares of Norwegian Cruise Line gained 3.2% and Royal Caribbean added 3%.

Match Group — Shares of Match Group rose 3.6% after the online dating platform announced on Thursday that it will sell shares of its common stock in a registered direct offering. The price per share and number of shares of common stock issued will be calculated by a volume-weighted average price during a five-day averaging period starting Friday, the company said.

Merck — Shares of the pharmaceutical giant rose 1.2% on Friday after Merck and AstraZeneca announced that treatment using the drug Lynparza showed positive results in a phase-three trial. The trial results suggest that the treatment slows the progression of prostate cancer and show a trend toward increased survival, the companies said.

Nike — The apparel stock fell more than 6% after Nike cut its full-year guidance for sales growth. The company said supply chain issues in Vietnam were slowing sales. Nike now projects mid-single-digit revenue growth for its 2022 fiscal year, down from prior guidance of low-double-digit growth.

Costco — Shares of the retailer jumped more than 2% following Costco’s fourth-quarter results. The company beat top- and bottom-line estimates during the quarter, earning $3.90 per share excluding items on $62.68 billion in revenue. Analysts surveyed by Refinitiv were expecting $3.57 per share on $61.3 billion in revenue.

Salesforce — Salesforce extended its Thursday gains, rising 2.2% after Piper Sandler upgraded the stock to overweight from neutral, saying it’s confident the company could see “a multi-year period of multiple and profit expansion.” The stock jumped on Thursday after the software company raised its full-year 2022 revenue guidance.

Coinbase — Shares of the cryptocurrency exchange slid about 1.6% even after Needham reiterated the stock as a buy. Cryptocurrencies plunged Friday morning on news that China is issuing yet another crypto crackdown. Coinbase derives 90% of its revenue from retail transactions, which is highly correlated with crypto asset prices, according to Needham, so its stock price tends to move in tandem with cryptocurrencies.

Cheesecake Factory, Dave & Buster’s — Cheesecake Factory and Dave & Buster’s added 4.4% and 5.2%, respectively, after Jefferies upgraded the restaurant stocks to buy from hold. “We are incrementally more positive on the full service category following delta/inflation sell-off and exuberant Consensus forecasts reigned in,” Jefferies said.

Roku — Roku shares fell 3.8% after Wells Fargo downgraded the video streaming platform to equal weight from overweight. Wells Fargo said rising competition makes expectations for Roku’s revenue growth likely too high.

— CNBC’s Jesse Pound, Pippa Stevens and Tanaya Macheel contributed reporting

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Business

Jim Cramer says ‘run with the bulls’ and buy these winning stocks

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CNBC’s Jim Cramer on Wednesday offered investors a basket of stocks he believes can continue to succeed irrespective of Federal Reserve policy.

“Forget the big picture stuff. There are two things you need to keep track of when you’re picking stocks right now: The sector and the company, which includes the people running it,” the “Mad Money” host said.

The bottom line, Cramer said, is investors have two choices. The first is listening to the “Fed-obsessed experts,” he said. The second is to “forget about the money supply or the central bank and just run with the bulls. It’s not like they’re hard to find in this fabulous market.”

Semiconductors

A sign is posted in front of the NVIDIA headquarters on May 10, 2018 in Santa Clara, California.

Justin Sullivan/Getty Images

Cramer said he believes the entire chip industry is “in bull-market mode” with a number of companies doing well, such as NXP Semiconductors, Marvell Technology and Qualcomm.

“But I prefer AMD and Nvidia because they make incredible products and they have fabulous leadership,” Cramer said, noting that AMD, under CEO Lisa Su’s direction, is looking to finalize an acquisition for Xilinx.

Nvidia, similarly, is trying to complete a deal for Arm Holdings, Cramer noted. If it clears the necessary regulatory hurdles, Cramer said Nvidia “will become the most important semiconductor company of our time.”

Financials

Many of the country’s largest banks offer investors “the greatest bargains” relative to the rest of the stock market, Cramer said. That’s especially true when considering they “could be just a few months away from a new rate hike cycle,” Cramer said. Banks benefit from higher rates.

Cramer said his favorites right now are Morgan Stanley and Wells Fargo.

“Morgan Stanley’s not a bank anymore: It’s a wealth advisory service that happens to do some investment banking on the side. That means it’s bank light. I like that,” Cramer said.

Wells Fargo, on the other hand, offers a “turnaround story” after scandal-ridden years, Cramer said, adding he believes in CEO Charlie Scharf to keep delivering improvements.

“One day I expect Wells Fargo to return to the high $50s [per share], where it was when all hell broke loose. Until then, just stay the course,” Cramer said.

Retail

A medical worker wears a protective face mask outside Best Buy in Union Square in New York City.

Noam Galai | Getty Images

Cramer said he believes it’s not too late to purchase shares of Best Buy and Bed Bath & Beyond. The former’s digital transformation and tech membership program should allow for additional success, Cramer said, while the latter is another example of a turnaround story.

“They have all the tech you need in terms of shopping and buying,” Cramer said of Bed Bath & Beyond. “But what they really have is something I like to call ‘whimsy,’ something that you could only really find at Costco until recently. I think CEO Mark Tritton will take Bed Bath for a multi-year run.”

Agriculture

Cramer said the “most unknown bull market” out there is agriculture.

“I’ve long been a fan of AGCO, but that Deere conference call last week [was] magnificent,” Cramer said. “I scoffed at Cathie Wood, the best money manager of 2020, when she said she was buying Deere for its tech — I owe her an apology. I apologize. She nailed it. The technology Deere talked about is truly revolutionary; it will save farmers billions of dollars in wages because everything is pretty autonomous. Deere’s still a buy.”

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