3 themes moved stocks to another record week – and a banner month
Stocks hit record highs again last week, capping a banner month for the market. Investor optimism about the end of the Iran-US war, a series of positive corporate earnings reports, and strength in technology stocks led to new records for the S&P 500 and the Nasdaq Composite, which rose more than 1% and more than 2%, respectively, during the holiday-shortened trading week. That brought the S&P 500’s weekly gain to nine, while the Nasdaq rose eight in the past nine weeks. Friday also marked the last trading day of May, when the S & P 500 and Nasdaq advanced by about 5% and 8%, respectively. The small 30-stock Dow gained less than 1% last week, and posted a nearly 3% climb for the month. Will the meeting continue on Monday? The market is not in overbought territory at the moment, according to the S & P Short Range Oscillator, with a reading of 2.63%. Anything above 4% indicates that stocks are likely due for a pullback. Until then, here are three themes that moved the market last week. Peace progress (probably) Lots of mixed signals coming out of the Middle East, but end on a positive note. Stocks fell on Wednesday as oil prices fell after Iranian state media reported that Iran’s leaders wanted to restore commercial traffic through the Strait of Hormuz to pre-war levels. However, a few hours later, the White House called the report “complete speculation.” The IS & P 500 retreated but still ended the session higher. A day later, Axios reported that US and Iranian negotiators had finally reached a peace deal but would need President Donald Trump’s approval. The headline sent stocks soaring, with the S&P 500 and Nasdaq closing at records on Thursday. The war has continued to move the market since the start of overseas attacks in Feb. 28. All in all, our advice remains the same: Don’t make a big move based on one topic. AI stocks are rocking strong quarterly earnings reports from the biggest tech companies. Snowflake, a cloud-based data platform provider, delivered a beat-up quarter and issued sweet guidance for the second quarter late Wednesday. The real kicker was Snowflake’s AI compute deal with Amazon, which included a $6 billion commitment to Amazon Web Services over the next five years. The news helped rekindle interest in the AI trade, kicking off a broader rally in the technology. Snowflake shares jumped more than 36% in the session, its best day to date. Amazon stock advanced 0.7%, and gained 1.6% for the week to date. The AI rally got another boost late Thursday with earnings led by Dell, as the company posted its fastest-ever revenue growth , supported by strong AI-related demand. Dell stock rose as much as 32% on Friday, posting its best session ever. Some technical terms linked to AI trading have joined. Broadcom hit an all-time high, jumping 4.7%. Arms stocks gained 5.3%. (We cut the chip designer Tuesday following a parabolic move.) Shares of Nvidia, which makes graphics processing units inside Dell’s servers, advanced about 1%. Jim Cramer said Dell’s results bolstered his confidence in Nvidia, given its close ties to powering AI systems. “This is the one to buy,” Jim said of Nvidia during Friday’s morning session. Not all earnings releases have caused flight. Salesforce delivered a rhythm of highs and lows late Wednesday, but direction appeared bright. We were hoping that CEO Marc Benioff could convince Wall Street that AI isn’t eating software. That didn’t happen. The stock fell about 1% in the subsequent session, but is still up 6% for the week so far. On Thursday, Jim said he would buy more if the Club was not banned. Cyber whips It was a volatile week for Internet stocks as two corporate earnings reports told very different stories about the health of the sector. Strong guidance from Zscaler led to the stock’s worst one-day performance on Wednesday. Investors treated the release as a learning from industry peers, and shares of Club Holdings CrowdStrike and Palo Alto Networks retreated. We don’t care, as the Zscaler issues seem to be company-specific rather than systematic. None of this mattered a few moments later when Okta reported. The company beat first-quarter estimates, citing increased demand for its security tools driven by the rise of agent AI. Okta stock jumped more than 30% as a result on Friday. Palo Alto Networks and CrowdStrike rose 9.2% and 8.9%, respectively. We have long said that the adoption of AI will benefit both our cybersecurity. Let’s hope we hear the same when Palo Alto and CrowdStrike release quarterly results on June 2 and June 3. (See here for a full list of stocks from 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. 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