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. Market update: The S & P 500 is slightly higher on Wednesday , reversing its early session losses. The yield on the 10-year Treasury declined significantly in the session on a mix of economic data and the Treasury Department’s announcement that it will keep auction sizes steady for the next several quarters. As Jim Cramer explained during the Morning Meeting , the drop in interest rates buoyed the stocks. The AI buildout : One pocket of weakness in the market is megacap tech stocks, which are lower in the session in sympathy with Alphabet’s post-earnings selloff. The main reason for Alphabet’s decline was the concern it was spending too much to build out its AI infrastructure and not getting a sufficient return on that investment. When you plan on investing tens of billions of dollars more than anticipated in AI infrastructure, the market wants to see and hear about accelerating revenue growth. Alphabet’s quarter resurfaced a market debate about whether the capital-intensive AI buildout is worth all that spending. Although this question has been renewed, the aggressive spending forecast also poured some cold water on a different market debate: Will we see the industry pull back its infrastructure investments as a result of DeepSeek’s efficient and low-cost large language model? So far, none of the big hyperscale companies have blinked but we still have to see what Amazon has to say when it reports Thursday night. But Alphabet’s strong forecast is why Nvidia and Broadcom are rebounding. For Broadcom, it is only $7 per share away from its level prior to DeepSeek revealing its new model in late January. Time to take profits: Shares of Starbucks are on a tear to start 2025, rallying roughly 22%, which puts it inside the top 10 of the S & P 500. The stock was already having a good January, moving to roughly $100 from $91, but the rally got an extra jolt last week after the company reported quarterly earnings . The results were slightly better than feared, but perhaps the best part of the quarter was the tangible sign of progress in CEO Brian Niccol’s turnaround plan. The key line was the U.S. sequential same store sales improvement made throughout the quarter. The market cheered this comment because it was evidence that Niccol’s plan to fix the brand was yielding positive results. Immediately after earnings, the stock jumped 8% to about $108 per share and the stock has continued to run. It currently sits at a new 52-week high of $111, making the gains since right before Niccol was named CEO at about 44%. We haven’t sold a single share into this fantastic run because Niccol is one of the most bankable executives in the industry. But the next time we are free to trade it we will trim the position. Given the run in Starbucks, it is prudent to lock in some of our big gains with a small sale when we are not restricted from trading it. As a result, we are downgrading our rating to a 2. Up next: Companies reporting after the closing bell Wednesday include Ford Motor , Arm Holdings , Qualcomm , Viking Therapeutics , O’Reilly Automotive , and Mckesson . Thursday is one of the busiest days this earnings season. Four companies in the portfolio are scheduled to report: Bristol Myers Squibb , Eli Lilly , Honeywell , and Linde . Some of notable companies reporting are Roblox , ConocoPhillips , Hershey , Yum Brands , Tapestry , Aptiv , Air Products & Y Chemicals , AstraZeneca , Ralph Lauren , and Becton Dickinson . (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.
People are seen leaving a Starbucks in New York City on Jan. 14, 2025.
Angela Weiss | AFP | Getty Images
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.
