S&P 500 extends winning streak to 6 weeks. What drove the stock market gains
Another great week for stocks is in the books. The IS&P 500 and Nasdaq rallied on Friday to close the week at a record high as Wall Street celebrated another strong set of earnings and a strong-but-not-too-strong jobs report, while holding out hope for an end to conflicts in the Mideast. As every week since late February, the war in Iran remained a focus for investors. But the confusing number of headlines made it impossible to tell where the argument was headed next. Media reports on Wednesday said the US and Iran were nearing a 14-point deal to end the war. A day later, both sides reported an exchange of fire in the Strait of Hormuz, a critical global oil shipping hub. On Friday morning, Secretary of State Marco Rubio said, “We should know something today” from Iran about the latest peace proposal. There has been no word since Saturday afternoon. Treasury Secretary Scott Bessent has said Iran will be a topic at next week’s Beijing summit between President Donald Trump and China’s Xi Jinping. For the week, the S & P 500 jumped 2.3%, while the Nasdaq gained 4.5%. Both indices have risen for six consecutive weeks – their longest winning streak since 2024. It certainly helped that oil prices and bond yields fell, which has been a bullish combination for stocks as of late. It is not clear whether the stock market will be able to continue next week. Until then, here are three things that drove trading last week. What’s next for the Fed? Friday’s mixed economic reports did not stop the market’s progress. The April jobs report was strong, but consumer sentiment remained very low. They complicate matters with the Federal Reserve’s next interest rate decision, however, with Jerome Powell’s term as central bank chairman ending on May 15 and Trump’s successor, Kevin Warsh, not seeking Senate confirmation. The Labor Department said on Friday that the number of people being billed rose by 115,000 last month, far beating economists’ expectations of a muted 55,000, but well short of the 185,000 jobs created in an unusually strong March. April’s unemployment rate remained steady at 4.3%. Prints weakened the case for near-term rate cuts due to a tightening labor market. However, it did not fully open the door for Warsh, who had been a vocal proponent of lowering rates. Jim Cramer asserted that parts of the economy linked to housing and consumer spending still need low prices. “I still believe the Whirlpool economy is what Warsh is going to focus on,” Jim said during Friday’s Morning Meeting, referring to slowing demand across the lower consumer and housing-related categories. Shares of Whirlpool are down 20% this week after the company cut its path forward and suspended its long-drawn dividend. A recent University of Michigan survey on how consumers feel about the economy supported Jim’s view. Rising gasoline prices due to the Iran war sent early May readings on consumer sentiment to a new low. Cyber Stocks Soar A quarterly earnings report from cybersecurity rival Club Holdings CrowdStrike and Palo Alto Networks boosted their stocks, rising about 16% and 15%, respectively, for the week. The driver was firewall provider Fortinet, which raised its full-year billing guidance. Investors view the company’s report as reading the lives of our favorite names on the Internet. All in all, it’s been a tumultuous year for cyber stocks. The group has been unfairly caught in the selloff in software names like Salesforce. Wall Street downplayed the scope of AI-driven disruption. We’ve long thought that increased adoption of AI will benefit cybersecurity companies, and we’re glad to see investors coming around to this idea. Optical Partnerships Our top performer last week was Corning, up 18%. The stock really took off on Wednesday after the company shared upbeat financial forecasts and announced a major deal to supply Nvidia, which also had a strong week, gaining 8.4%. During its Investor Day presentation, Corning forecast annual sales of $20 billion by 2026, resulting in a 15% compound annual growth rate (CAGR) for sales from the fourth quarter of 2023 to Q4 of 2026. will open three new US manufacturing plants to produce fiber optic technology with Nvidia. As part of the multi-year agreement, Corning will increase US optical connectivity production tenfold and increase fiber production capacity by 50%. All of this is an attempt to keep up with the massive amount of demand for AI infrastructure. “We’re facing the single largest infrastructure build in human history,” Nvidia CEO Jensen Huang said on “Mad Money,” one day after the news broke. On Thursday evening, Jim also interviewed Corning CEO Wendell Weeks, who also spoke about the alliance. Weeks also said the deals with two previously unnamed hyperscalers are “bigger” than the $6 billion deal with Meta Platforms. (See here for a full list of stocks in Jim Cramer’s Charitable Trust, including CRWD, PANW, CRM, GLW, NVDA, META.) 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 stock in his charity portfolio. When Jim talks about a stock on CNBC TV, he waits 72 hours after issuing a trade warning before making a trade. THE PRIVATE INFORMATION OF THE BURNING CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AND OUR PRIVACY POLICY. NO LEGAL LIABILITY OR OBLIGATION EXISTS, OR IS CREATED, BY YOUR ACCEPTANCE OF ANY INFORMATION PROVIDED BY CONTACTING THE INVESTMENT CLUB. NO PARTICULAR RESULT OR INTEREST IS GUARANTEED.
