The Nasdaq looks ugly, giving many stocks in the broader market their time in the sun

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 rotation: The S & P 500 was having a rough day — falling roughly 1%. The Nasdaq was even worse — sinking 2%. However, most stocks were up with about 6 to 1 advancers to decliners on the New York Stock Exchange. For weeks the criticism about the record rally has been its narrow leadership, with the mega – cap tech stocks and growth/momentum stocks carrying the major stock measures higher. The reverse happened Thursday as those stocks became a source of funds to buy the rest of the market, especially the housing stocks, solar stocks, real estate stocks, utilities, cyclical, and small caps. These are the companies that benefit most from lower interest rates. Leadership : When examining the action, will the cool June consumer inflation print be the catalyst of a change in market leadership from growth into value? We think it is way too early to know and we don’t see changes to our portfolio happening given the balance we already have between growth and artificial intelligence beneficiaries and Federal Reserve rate cut plays. Still, these kinds of vicious rotations — the small-cap Russell 2000 surged roughly 3.5% on Thursday — have a habit of lasting around three days. That allows stocks that have lagged to catch up. Things to consider : Those rotations also usually start when least expected, so we are always conscious about taking some profits on loved tech stocks on the way up as we did with Meta Platforms and Palo Alto Networks on Monday, and slowly adding quality but out-of-favor stocks on the way down. If the market continues to take down some of the AI winners into next week, it could be an opportunity to add more exposure. We recently looked at some buy levels to consider for investors with no Big Tech exposure. 2 or 3 rate cuts: A rate cut of 25 basis points in September was starting to get penciled in before Thursday’s consumer price index, but there was still plenty of debate around whether that would be the only cut this year. After the market saw the CPI for June fall 0.1% month over month, the prospects of two or more cuts became more likely and the market now sees a roughly 50% probability of three cuts by the end of the year, according to CME FedWatch. Up next: Wall Street will be clamoring Friday morning to see whether the June producer price index, a measure of wholesale inflation, will confirm the cool-down seen in the CPI. Headline PPI is expected to increase 0.1% month over month and 2.3% year over year. Banks also kick off second-quarter earnings season before Friday’s opening bell, with Club name Wells Fargo as well as JPMorgan and Citigroup set to report. Our other Club financial stock Morgan Stanley reports earnings this coming Tuesday. (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.

Traders work on the floor of the New York Stock Exchange (NYSE) on July 11, 2024 in New York City.

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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.