Higher yields pressure stocks — and Cramer predicts Disney share reaction if Peltz loses board fight

By News Room Last updated Apr 1, 2024

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.) Markets dip: Stocks kicked off the second quarter on a lower note. The decline Monday follows a positive move last week that sent the S & P 500 to another record high. The recent rally also pushed the S & P 500 Short Range Oscillator , a technical indicator we closely follow, into overbought territory, which prompted us to make some sales earlier in Monday’s session. Rates spike : You could also pin Monday’s dip to pressure from higher interest rates , which jumped after the latest U.S. inflation and economic data implied the Federal Reserve can wait before cutting interest rates. With the yield on the 10-year Treasury note spiking 13 basis points to about 4.32%, it’s no surprise to see weakness across rate-sensitive sectors and stocks like commercial real estate, utilities, and housing-related companies. One basis point equals 0.01%. Indeed, shares of Club name Stanley Black & Decker , which is tied to housing, were off roughly 2% in the session, among the biggest laggards in the portfolio. Disney: One of the sales we made Monday was in Disney; the other was in Alphabet. After Disney’s strong year-to-date performance, we took the opportunity to rightsize the position, which had become our largest by weighting, at nearly 5%. The sale comes ahead Disney’s annual shareholder meeting Wednesday. That’s when we will find out if Trian Partners’ Nelson Peltz was successful in his campaign for board seats. Meanwhile, Bank of America raised its price target on Disney to $145 from $130, citing strong momentum across its business. Analysts also reiterated their buy rating on Disney. “The note from Bank of America makes you feel more confident about the business than you should,” Jim Cramer said. “We sold some and I have no illusions that that the stock will go down if Nelson Peltz loses. We voted for Peltz.” Elsewhere in the market: Jim said he is “still worried” about consumer spending, as reflected in the results of certain companies including Club holding Starbucks. It’s not just Starbucks feeling the pain. Nike and Lululemon , which we don’t own, are two other big brands that have struggled this year . “As I said this morning and on last week’s [Monthly Meeting] , I fear Starbucks’ numbers are still too high. The consumer seems to be rebelling from any goods where the price is too high,” Jim said. We started buying shares of the consumer electronic retailer Best Buy last week on the belief that same-store sales — a key retail industry performance metric — could inflect later this year due to a new personal computer buying cycle. “The ancillary plays — Dell, Micron, AMD — indicate that the PC cycle could be ready for refresh and I still think that Best Buy should be going up with them,” Jim said. Later on: We just wrapped up the first quarter of the year, so it’s still pretty quiet on the earnings front. PVH Corp. , the global apparel company that owns brands like Tommy Hilfiger and Calvin Klein, reports after the close Monday. Paychex , a payroll and human resources firm for small and medium-sized business, reports Tuesday morning. (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.

Visitors wearing emblematic Mickey and Minnie Mouse ears look on, in front of the Sleeping Beauty-inspired castle at Disneyland Paris, in Marne-la-Vallee, east of Paris, on October 16, 2023. characters.

Ian Langsdon | Afp | Getty Images

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