Jim Cramer’s Top 10 Things To Watch Tuesday, August 6
The stock market faced significant turbulence on Monday, with the Nikkei 225 experiencing its steepest drop since the 1987 Black Monday crash. However, the market showed signs of recovery on Tuesday, with several key developments taking center stage. Here are Jim Cramer’s top 10 things to watch for on Tuesday, August 6, providing insights into potential market movers and trends to follow:
Key Takeaways:
- The Nikkei 225 rebounded strongly after Monday’s decline, suggesting the market might have found a temporary bottom. The "carry trade" strategy, which relies on interest rate differentials, was identified as a contributing factor to Monday’s sell-off.
- Uber reported strong second-quarter earnings, exceeding analyst expectations and pushing the stock up by 6% in pre-market trading. The company continues to demonstrate its ability to deliver solid results despite economic headwinds.
- A federal judge ruled that Google illegally maintained a monopoly in search and text advertising, focusing specifically on the company’s exclusive deals with Android and Apple. While Barclays views the decision negatively for both companies, Cramer believes Google’s appeal will be successful.
- Palantir Technologies experienced an impressive share price surge following a second-quarter earnings update. The data analytics company raised its annual forecast for the second time this year, citing strong demand for its AI platform.
- Caterpillar surpassed Wall Street profit estimates for the second quarter, driven by robust pricing strategies mitigating the impact of lower volume. Shares climbed more than 3% in the premarket, recovering some ground after recent declines.
- Morgan Stanley downgraded Amazon to a less favorable rating, citing concerns over cost pressures and slower cost-to-serve improvements. Despite this, Cramer maintains his perspective that Amazon’s earnings have been misinterpreted by the market.
- CrowdStrike received a positive upgrade from Piper Sandler, highlighting the stock’s price pullback as a potential buying opportunity. The cybersecurity company rebounded in pre-market trading after recent market volatility.
- Barclays increased its price target for FICO, the data analytics company recognized for its credit scoring model. The upward revision of the price target reflects a positive outlook for the company’s prospects.
- American Electric faced a downgrade from Bank of America, primarily based on valuation concerns. This decision contrasts with Cramer’s ongoing confidence in the company’s performance.
- Linde, an industrial gas provider, saw an increase in its price target from BMO Capital, demonstrating continued strength in a challenging macro environment. Cramer supports this outlook, having previously expressed similar sentiments after the company reported earnings.
Unwinding the Great Carry Trade: Japan Rebounds
The Nikkei 225 experienced a significant bounce back on Tuesday, following a dramatic sell-off the previous day. While the "carry trade," a popular financial strategy, was attributed as a contributing factor to the market downturn, the Nikkei’s resilience offers a glimmer of hope for a potential market bottom. The "carry trade" strategy involves borrowing money in a country with low-interest rates, such as Japan, and investing it in a country with higher rates. This strategy has been extremely popular for several years, but recent concerns about rising inflation and potential interest rate hikes in Japan have prompted investors to unwind their positions, leading to increased selling pressure.
This shift in sentiment could have far-reaching implications, not only for the Japanese market but also for global markets. However, the sharp rebound in the Nikkei 225 suggests investors might be reassessing their views on Japan’s economic prospects. The market’s reaction, therefore, provides a valuable insight into the evolving dynamics of risk appetite and investor sentiment. Cramer believes that this situation is an opportunity to invest in high-quality U.S. stocks that have been affected by the recent volatility.
Uber Delivers Strong Results
Uber, the ride-hailing and delivery giant, showcased its financial strength with a robust second-quarter earnings report. The company’s earnings per share (EPS) of 47 cents surpassed the analysts’ consensus estimate of 31 cents, driving the stock up by 6% in pre-market trading. This positive performance underscores Uber’s ability to navigate a challenging economic landscape, demonstrating its resilience and continued growth trajectory. The strong earnings report reinforces the positive sentiment surrounding Uber, solidifying its position as a key player in the transportation and delivery sectors.
Google Faces Antitrust Challenges
Alphabet, the parent company of Google, faced a setback with a federal judge ruling that the company has illegally held a monopoly in search and text advertising. The court’s focus was on Google’s exclusive arrangements with Android and Apple, highlighting concerns about potential anticompetitive practices. While Barclays predicts the ruling will negatively affect both Google and Apple, Cramer remains optimistic about Google’s chances, anticipating a successful appeal.
Google’s dominance in search and advertising has been a subject of scrutiny for years, with antitrust regulators raising concerns about its potential impact on competition and innovation. While the recent ruling poses challenges for Google, the company’s strong financial position and commitment to innovation provide a solid foundation for addressing these challenges. Cramer expresses confidence in Google’s ability to navigate this legal hurdle and reiterate his support for the company as a long-term holding.
Palantir Technologies: Riding the AI Wave
Palantir Technologies, a data analytics company, experienced a significant surge in its share price on Monday after reporting impressive second-quarter earnings. The company raised its annual forecast for the second time this year, reflecting strong demand for its AI platform. This development underscores the growing importance of AI in various industries and the strong position Palantir holds within this rapidly evolving market.
The company’s CEO, Alex Karp, emphasized Palantir’s mission to be a "ray of light in America and our Western allies," highlighting its commitment to supporting important endeavors. This statement resonates with investors, solidifying Palantir’s image as a company driven by purpose and innovation.
Caterpillar: Strong Pricing Power
Caterpillar, the industrial giant, displayed its financial resilience by exceeding Wall Street profit expectations in the second quarter. Despite modest revenue declines, the company demonstrated its ability to manage cost pressures through robust pricing strategies, proving its strength despite economic headwinds.
Caterpillar’s performance reflects the ongoing strength of the industrial sector, showcasing its ability to navigate challenges and maintain profitability. The company’s strategic pricing approach serves as a key driver of its financial success, underscoring its ability to adapt to changing market conditions. Cramer is optimistic about Caterpillar’s ability to continue to deliver strong results in the coming quarters.
Amazon: Facing Market Skepticism
Despite a strong earnings report, Amazon was downgraded by Morgan Stanley internet analysts. The analysts cited concerns over cost pressures, particularly in merchandise margins, and slower cost-to-serve improvements, leading them to revise down their estimates for Amazon’s operating income and free cash flow for 2025.
While the downgrade signals a shift in sentiment for Amazon, Cramer believes the market has misinterpreted the company’s recent performance. He anticipates that Amazon’s long-term growth potential remains intact, and the company is well-positioned to navigate challenges effectively.
CrowdStrike: Cybersecurity Opportunity
CrowdStrike, a leading cybersecurity firm, received a positive upgrade from Piper Sandler, who see the company’s recent stock price pullback as a valuable buying opportunity. CrowdStrike experienced a downward trend in its share price after a global IT outage caused by a company update, but Piper Sandler considers this downturn as a temporary setback.
The cybersecurity industry is expected to continue growing rapidly due to increased cyberattacks and the growing reliance on digital infrastructure. CrowdStrike’s strong performance and commitment to innovation place it at the forefront of this dynamic sector, making it a potentially attractive investment opportunity for those seeking to capitalize on the growing demand for strong cybersecurity solutions.
FICO: Credit Scoring Powerhouse
FICO, the data analytics company renowned for its credit scoring model, received a positive price target elevation from Barclays. The increase from $1,500 to $1,800 underscores the analysts’ confidence in FICO’s ability to deliver strong performance in the future. While the credit scoring market is a well-established sector, FICO’s commitment to innovation and technological advancements has helped it maintain a leading position. This optimism highlights FICO’s ability to leverage its expertise and maintain its relevance in a rapidly evolving industry.
American Electric: Valuation Concerns
American Electric was downgraded by Bank of America, citing primarily valuation concerns. The downgrade presents a contrasting view to Cramer’s assessment of the company’s performance, which remains positive. While valuation concerns are valid in a challenging market environment, Cramer believes American Electric’s underlying fundamentals and commitment to sustainable energy solutions provide a strong foundation for growth, justifying his continued confidence.
Linde: Strong Execution in a Tough Macro Environment
Linde, a leading industrial gas provider, saw an increase in its price target from BMO Capital, reflecting analysts’ positive outlook for the company’s continued strength despite a challenging macro environment. Linde demonstrated a solid performance in its recent earnings report, highlighting its ability to navigate economic headwinds and maintain its growth trajectory. Cramer echoes this positive sentiment, having previously praised Linde’s resilience and its potential to thrive in a challenging market environment.
Investing Club Insights: A Guide to Smart Trading
The CNBC Investing Club, led by Jim Cramer, offers subscribers valuable insights into the stock market. Members receive a trade alert before Jim executes a trade, giving them a head start in the market. While Jim waits for 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio, he extends this waiting period to 72 hours for stocks he has discussed on CNBC TV. This approach allows members to make informed trading decisions and aligns with the Investing Club’s commitment to transparency and responsible investing.
