Every weekday, CNBC Investing Club with Jim Cramer publishes the Homestretch — an actionable afternoon update, just in time for the final hour of trading on Wall Street. Market Action: The S&P 500 was on track for small earnings after a solid rally last Friday. There's still some market rotation going on, but this time it's the opposite of the flight from technology that dominated the past few weeks. The so-called Magnificent Seven stocks — we own six of them: Apple, Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia — fared better on Monday. Small caps, as measured by the Russell 2000, lagged. Month-to-date, the Russell is up nearly 9%, the Dow is up 3.5%, the S&P 500 is virtually flat and the Nasdaq is down nearly 2%. Trial Verdict: We're encouraged that despite being ordered to pay $495 million in the premature infant formula case, Abbott Laboratories shares have recovered significantly from their morning lows. The marginal decline could be a sign that the bad news was already priced in, with tens of billions already lost in market capitalization since March. Or it could be a sign that Wall Street is realizing that this verdict was a joke. Abbott CEO Robert Ford believes that recalling these products would create a public health crisis. What other option does Abbott have to limit its litigation risk? If the stock drops just 1% on this bad news, we can't help but wonder what the benefits would be if they start winning cases or if there is a settlement. Abbott is a long way from either, but this type of exercise helps us gauge our risk-reward ratio going forward. IPO Talks: Honeywell shares briefly rose a few percent late Friday when Bloomberg reported that the company is considering an IPO of its quantum computing business, Quantinuum, as early as next year. The valuation being talked about was around $10 billion. We see such a move as a mildly positive and a possible recognition that Honeywell plans to monetize this business at a rising valuation. But we're not surprised to see the stock quickly give up those gains. “Honeywell isn't getting any credit for Quantinuum because the company didn't deliver earnings last week. The market isn't going to let them get away with that,” Jim Cramer said Monday afternoon. Honeywell reported solid second-quarter revenue and better-than-expected adjusted earnings per share, but disappointingly reduced its full-year adjusted earnings per share outlook due to slower growth in its short-cycle businesses and acquisition-related costs. Next up: Tuesday marks the start of the gauntlet of second-quarter club earnings season. Before the opening bell, we get numbers from Procter & Gamble and Stanley Black & Decker. We made two small sales in Stanley Black & Decker as we made gains we didn't want to give up. Twelve more club names are reporting earnings later in the week, including Advanced Micro Devices, Microsoft and Starbucks after the market closes on Tuesday. We bought more Starbucks shares on Monday — not as a statement ahead of quarterly results, but to fulfill our signal from a week ago, when we upgraded the stock to our 1 Buy rating after learning that activist firm Elliott Management had acquired a stake in the coffee giant. (For a full list of stocks in Jim Cramer's Charitable Trust, click here.) As a subscriber to CNBC Investing Club with Jim Cramer, you'll receive a trade alert before Jim makes a trade. After sending a trade alert, Jim waits 45 minutes before buying or selling a stock from his charitable foundation's portfolio. If Jim has spoken about a stock on television, he waits 72 hours after the trade alert is posted before executing the trade. THE INFORMATION REGARDING INVESTING CLUB PROVIDED ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY AND OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR OBLIGATION IS PROVIDED OR CREATED BY RECEIVING INFORMATION RELATED TO INVESTING CLUB. NO PARTICULAR RESULT OR PROFIT IS GUARANTEED.
Every weekday, CNBC Investing Club with Jim Cramer publishes the Homestretch – an actionable afternoon update, just in time for the final hour of trading on Wall Street.
