CNBC Investing Club Recap: S&P 500 Falls From Record High as AI Stocks Under Pressure
Jim Cramer discusses AI pullback, Arm Holdings decline, and Starbucks earnings ahead of Tuesday's close
Quick Look
- The S&P 500 fell from its record high Tuesday as a Wall Street Journal story on OpenAI's business performance weighed on the AI complex.
- Jim Cramer explained the pullback is exactly why he advises taking profits on parabolic moves, calling it an opportunity for investors who recently trimmed big winners.
- Arm Holdings dropped 8.5% following Monday's 8% decline, with Jim suggesting investors could start building positions if the stock declines further.
AI-generated summary
Every weekday the CNBC Investing Club with Jim Cramer holds a "Morning Meeting" livestream at 10:20 a.m. ET. Here's a recap of Tuesday's key moments.
1. The S & P 500 fell from its record high Tuesday as a Wall Street Journal story on OpenAI's business performance weighed on the artificial intelligence complex. Jim said the pullback Tuesday in red-hot AI stocks is exactly why he pushes investors to take profits in names that have seen parabolic moves. That makes them susceptible to being dragged down by things like The Journal's report. "The essence of good investing is to not keep a parabola without taking advantage of it," Jim said. For example, last week we trimmed Broadcom again after a big move, and we also lightened up on Qnity Electronics. Now, Jim said the pullback is an opportunity for investors who recently trimmed big winners. "You have a chance. If you sold in the parabola, you can go back if you want to and you can buy back," Jim said.
2. Arm Holdings is one of those chip stocks under pressure Tuesday, shedding another 8.5% following Monday's 8% decline. With the stock now trading at roughly $198 a piece, Jim said investors who don't own Arm might have a chance if the stock "comes down a little more." He advised investors to start with an entry position, buying only a quarter of the amount of shares they'd like to own. Arm's decline comes after a nearly 41% rally last week was capped off Friday with record close of about $235. We initiated a position in Arm last Monday at nearly $173 per share.
3. Starbucks reports after the close Tuesday. Wall Street expects a largely positive performance on comparable-store sales amid CEO Brian Niccol's turnaround efforts. However, the coffee chain's margins are still in question. We explored the margin debate in detail earlier Tuesday. "I'm in favor of trimming some," said Jim, advising investors to shave a quarter of their position. Jim said he's concerned that with a choppier economic backdrop, consumers may spend less on discretionary items like Starbucks. The Club trimmed some shares last Monday. We're restricting from trading the stock Tuesday.
4. Stocks covered in Tuesday's rapid fire at the end of the video were: Coca-Cola, United Parcel Service, General Motors, and Kimberly-Clark. (Jim Cramer's Charitable Trust is long AVGO, ARM, SBUX. See here for a full list of the stocks.) 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.
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