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. Markets slide: Wall Street is in sell-off mode Wednesday, with about three decliners for every advancer on the NYSE. The session mirrors what happened last week, with tech stocks and other year-to-date winners pulling back in favor of a broadening out to other areas of the market. The tech-heavy Nasdaq is down more than 3%, on track for its worst day since December 2022. The S & P 500 is sliding nearly 2%, while the Dow is down roughly 370 points, or 0.9%. Strong earnings in artificial intelligence-linked companies were mostly met with profit-taking, as the likes of Club name Alphabet and data center power firm Vertiv saw their stocks fall despite better-than-expected results. The prevailing theme we are hearing to explain the selling: Companies are shelling out billions of dollars on AI and not seeing much of a return, so it’s time to lock in gains and look elsewhere in the market. We would never argue with someone who wants to take a profit, but we don’t think these stocks should be abandoned because companies cannot afford to fall behind in this technological arms race. In recent days, we’ve mentioned our hesitancy to buy the dips anywhere until the S & P Short Range Oscillator exited overbought condition. Even though the S & P 500 fell Tuesday, the Oscillator moved in the wrong direction, ticking up to 6.36% from 5.86% a day earlier. Anything about 4% is considered overbought. We’ll be monitoring our emails after the close to see if this stubborn overbought condition has finally worked its way off. ‘Imagine that’: Our colleagues at CNBC.com on Tuesday published an enlightening story on how Club holding Best Buy plans to capitalize on the recent AI innovations in consumer technology to drive sales. A big part of Best Buy’s push is education, with staff helping customers understand new features and supporting them if they have questions. The tagline for its marketing campaign: “Imagine that.” The story captured exactly what we want to see from Best Buy. Leaning into experiential shopping and personalization can help Best Buy fend off competition from retail heavyweights Amazon and Walmart . With a replacement cycle and new AI-enabled devices rolling out, we expect Best Buy to finally break its streak of declining quarterly comparable sales toward the end of this year. Greener pastures : Abbott Laboratories shares were on a four-session winning streak ahead of an important verdict in a lawsuit over its specialized formula for premature babies. On Tuesday night, The Wall Street Journal’s editorial board called these lawsuits a “shakedown of Abbott Laboratories and Reckitt Benckiser for producing life-sustaining formula for pre-term infants, which could force the companies to pull their products from the market.” The Journal op-ed also mentioned the outsized decline in Abbott’s market cap since investor concerns about the legal risks surfaced in March. “Abbott’s market valuation has fallen by some $30 billion since March,” the Journal’s editorial board wrote. “It makes only $9 million in revenue annually from the specialized formula, about 0.02% of its total sales last year.” We’ll have to just wait and see what happens next with the case in St. Louis and then after that. But we think it’s a good sign that Abbott’s rally the past four sessions — especially in an ugly tape across the market — has completely erased its post-earnings sell-off last week . It could be a sign that investors are warming up to the idea that this litigation risk is manageable. Or perhaps people are starting to focus again on Abbott’s fundamentals, which have been strong after two straight beat and raise quarters. Either way, the move is encouraging. Up next: Ford reports after the close and what we’ll be monitoring is Ford Pro’s profitability, comments on improving quality and capital allocation decisions. A few other big earning releases later are Chipotle , IBM , Las Vegas Sands , WM , and Whirlpool . Some of the notable releases Thursday morning are Honeywell , Dover , AbbVie , RTX , Keurig Dr. Pepper and Carrier . Honeywell and Dover are Club holdings. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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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.
