Stocks moved lower since our last CNBC Investing Club Monthly Meeting as renewed inflation concerns, sparked by rising oil prices, sent Treasury yields higher — a toxic mix for the market.
In early Thursday trading, it was much of the same, with Iran war uncertainty pushing U.S. oil prices above $100 per barrel, joining international crude already above that troublesome threshold. The 10-year Treasury yield responded by rising above 4.9% to its highest level since November 2023. Shortly after the open, the Nasdaq's roughly 1% drop was the worst, followed by more modest losses for the S&P 500 and Dow Jones Industrial Average. The Nasdaq later pared some of its losses.
Since our last monthly meeting on Aug. 13 through Wednesday's close, it was the Dow that led the declines, falling 2.7%, while the S&P 500 dropped 2.1% and the tech-heavy Nasdaq lost 2.1%. Ahead of our September meeting livestream, starting at noon ET, here's a look at what moved our top three stocks and bottom three over the past four weeks.
Top performers
Salesforce up 21.3%
Salesforce delivered better-than-expected revenue and an upbeat outlook, providing fresh evidence that AI is helping rather than disrupting its business. CEO Marc Benioff dismissed fears of a "SaaSpocalypse" as "nonsense," noting that nine of the 10 leading AI companies use Salesforce products and their spending is up 435% year over year. The software company also unveiled Claudeforce, which integrates Anthropic's Claude with Salesforce customer data to help users automate tasks. After spending much of the year in the penalty box on AI disruption fears, Salesforce is finally showing investors that it is a beneficiary of the technology. The company's Dreamforce showcase event is next week, which could be a further catalyst for a stock that still has some work to do to get back to even year to date.
Meta Platforms up 9.9%
The Facebook and Instagram parent went from one of our worst heading into the prior Monthly Meeting to one of our best performers ahead of Thursday's meeting. How did that happen? Two major overhangs eased. Meta agreed to an $18 billion settlement with attorneys general across the country over claims that social media platforms harm younger users, eliminating the risk of a prolonged trial and potentially much larger penalties. Jim called the resolution a "really big break" for the company. Investors also grew more optimistic about Meta's AI efforts following the release of Muse Spark 1.3, which drew praise for its capabilities and low cost and strengthened the case that Meta can compete with leading AI labs. After months of skepticism around the company's massive AI spending, these developments gave investors more reasons to reconsider the stock.
Micron up 8.2% (remember, this gain is as of Wednesday's close; the stock is volatile, and it was down early Thursday)
Micron stock has been directionally better since its recent swoon as the outlook for AI memory demand just keeps going up and up. Bullish long-term forecasts from fellow Club names Nvidia and Broadcom reinforced that demand for AI chips remains supply-constrained, another positive read-through for the high-bandwidth memory and DRAM, or dynamic random-access memory. Micron is big in both. While the stock had been caught up in the forced selling surrounding the Situational Awareness unwind earlier this summer, the latest industry data points have helped investors refocus on fundamentals. We continue to believe tight memory supply and surging AI demand give Micron significant pricing power and a long runway for growth. That's why we bought more of the stock last week.
Bottom performers
TJX Companies down 18%
The off-price retailer stumbled after a rare execution miss at Marmaxx, the company's largest division. While overall revenue, earnings and same-store sales topped expectations, comparable sales at the unit that includes T.J. Maxx and Marshalls increased just 1%, well short of expectations. Management took the blame, saying they had the wrong mix of inventory. They put a plan in place to fix it and said they have already seen improvement. Several Wall Street firms downgraded the stock on concerns that the problems could linger and that TJX is losing its competitive advantage. We used the selloff to add to our position, but Jim said last week he is keeping a close eye to make sure the misstep will be temporary.
FedEx Freight down 17.9%
FedEx Freight continued to struggle following its June spinoff as concerns about tariffs and elevated oil prices weighed on transportation stocks. We don't think the weakness reflects a deterioration in the company's long-term story and believe FedEx Freight is well positioned to benefit when the freight cycle recovers. Jim has said he wants to buy more shares of the less-than-truckload leader but would prefer to see oil prices settle first.
Palo Alto Networks down 15.4%
The cybersecurity company sold off despite delivering strong quarterly results that reinforced our view that AI is a major tailwind for cybersecurity. CEO Nikesh Arora said roughly $1 trillion of global cybersecurity infrastructure needs to be modernized to handle emerging AI threats, underscoring the long-term opportunity. But after the stock's strong run, investors used the earnings report to take profits. We were glad we trimmed our position ahead of the print. We used the post-earnings decline to signal a holding pattern, upgrading Palo Alto to our 2 rating from our sell-on-strength 3.
