Jim Cramer’s top 10 things to watch in the stock market Wednesday

1. It’s national Nvidia day. The AI chip powerhouse reports earnings after the closing bell Wednesday, and it’s all anyone can talk about. The expectations coming into the print are sky-high. And, until Tuesday, mild back-to-back losses seemed like a normal blip after a 40% year-to-date runup after more than tripling last year. But Tuesday’s 4.4% drop and Wednesday’s early decline brings Nvidia’s losing streak to four in a row. Club name Nvidia needs to really shine. Anything less than amazing risks further downside. However, a further drop could be an opportunity.
2. We’re debating that exact issue around Palo Alto Networks‘ sharp post-earnings decline, which was wiping out all of this year’s gains. The stock had been on fire. But after Tuesday evening’s results, it’s sinking more than 20%. (Remember, Palo Alto more than doubled last year.) The quarter was strong but a slight billings miss and a disappointing reduction in its full-year outlook due to a shift in strategy were to blame. The issues, however, have nothing to do with what management sees as continued strong demand for cybersecurity.
3. This is why you need to scale out and downgrade the hot ones so you have room to buy them when they tumble. That’s what we did on the first trading day of 2024 when trimmed last year’s tech winners. Critics of the Club have, at times, said it’s bad practice to sell as the gains get outsized. But Palo Alto’s drop demonstrates why you can upgrade and buy some back if the thesis is intact. We will discuss this at our annual Club meeting Saturday, which members can livestream. It starts at 1:30 p.m. ET.
4. Wall Street is under pressure early Wednesday, with the Nasdaq looking like the weakest heading into the open as tech stocks slip on Palo Alto’s drubbing and Nvidia’s pullback. If stocks close lower Wednesday, that would make it three losing session in a row for the Nasdaq as well as the Dow and the S&P 500.
5. Amazon is set to replace Walgreens Boots Alliance in the Dow Jones Industrial Average. Another Big Tech name joins Club names Apple, Microsoft and Salesforce in the Dow 30. At same time, Amazon founder Jeff Bezos finishes selling 50 million shares.
6. Walmart is making so much money in advertising that it wants to dominate connected TV by buying Vizio, and I think it can. A brilliant acquisition for $2.3 billion. Bad news for Roku. Walmart also had strong earnings Tuesday, pushing the Dow stock up more than 3%.
7. Things were not as rosy at Home Depot, which on Tuesday beat the quarter but saw earnings and revenue below last year’s level. Chief Financial Officer Richard McPhail told CNBC demand dipped and falling lumber prices and elevated interest rates hurt business. HSBC on Wednesday downgraded the stock to sell from hold, citing poor sales momentum. This seems extreme to me. JPMorgan says buy the selloff. I agree. Home Depot was not as bad as people think.
8. Citigroup increases CEO Jane Fraser’s annual pay to $26 million. Appointed March 2021. Stock was $69 per share. Now it’s $55. Over the same time, JPMorgan shares price went from $150 to $179. Club name Wells Fargo went from $40 to now $51.
9. Mortgage applications down 10% from last week. Rates above 7%. Highest since December.
10. China banning institutional sellers from the opening and the close.

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