4 reasons for the tech selling Tuesday — and why we’re not changing our view on the group
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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. Markets: Stocks are starting the first day of October and the fourth quarter on a lower note, following a similar trend we saw at the start of August and September. The pullback in early August occurred after the popular “yen carry trade” imploded, causing forced liquidation of stocks. The September sell-off was based on an economic growth scare and concerns that the Federal Reserve was too slow to cut interest rates. Ultimately, the slow starts to August and September did not stand in the way of Wall Street recording a strong third quarter . This time, the selling is based on conflict in the Middle East after Iran launched missiles into Israel. The market reaction was a flight to safety — U.S. government bonds and the dollar are rallying, oil is spiking, and energy and defense stocks are jumping. We bought shares of Coterra Energy on Tuesday morning, partially as a hedge in case the events in the Middle East ratchet up and spark a bigger move in oil. The recent recovery in natural gas is another reason we decided to add to Coterra. Tech woes : The S & P 500 tech sector is having a rough day on several different fronts. For starters, a flight-to-safety session usually translates to tech weakness as investors take risk off the table. There’s also company-specific headlines hitting the group. Club name Apple is weak as analysts continue to scrutinize iPhone 16 lead times and its vast supply chain, searching for clues on how many phones the company may sell the rest of the year. As Jim Cramer stressed during the Morning Meeting , we do not overreact to these analysts notes despite all the attention they garner early in a hardware launch cycle. Instead, we maintain a long-term view that AI-infused devices will lead to a robust iPhone upgrade cycle over time . Meanwhile, PC-related stocks are getting hit after Citigroup took a more cautious view on a second-half recovery and downgraded HP Inc and CDW Corp . Not only that, Citi argued artificial intelligence-enhanced PCs won’t have a big impact on sales until the 2026/2027 timeframe. Lastly, news that Samsung Electronics is laying off thousands of employees could be hitting the semiconductors. We’re not changing our views on any of our tech positions — including chipmakers Nvidia , Broadcom and Advanced Micro Devices — or Best Buy , which benefits from the PC refresh cycle. Nevertheless, these are the reasons why the tech sector is down more than 2% Tuesday, by far the worst-performing sector out of 11 in the S & P 500. Energy is the leader, while communication services and utilities also are solidly in the green. Up next: Nike reports earnings after the closing bell. The struggling sneaker and athletic wear maker could provide insights into what’s happening in China after the recent announcement of economic stimulus measures. It also will be Nike’s last earnings report before Elliott Hill replaces John Donahoe as president and CEO. That change, announced Sept. 19, will become effective Oct. 14. Also reporting Tuesday are a couple of food stocks in fast-food fry supplier Lamb Weston and egg giant Cal-Maine Foods . Before the opening bell Wednesday, we’ll hear from Conagra , which owns brands such as Slim Jim, Hunt’s and Orville Redenbacher’s. We’re also keeping an eye out on ADP’s private-payrolls report ahead of the Labor Department’s pivotal jobs report on Friday. (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.
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.
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