An opportunity for Ford, plus Fed head Powell speaks and Abbott faces trial

Published Tue, Jul 9 20242:41 PM EDT

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. New highs: The broad-based S & P 500 index is on track for another record close, while the tech-heavy Nasdaq Composite gave up its early gains and was near the flatline. The mega-cap tech stocks are still in the green, but traded off their higher levels of the session. Meanwhile, the Dow Jones Industrial Average was down slightly. Powell speaks: Financials led the market and the big banks got a boost with Morgan Stanley hitting a new 52-week high after Federal Reserve Chair Jerome Powell confirmed regulators are nearing changes to the Basel III proposal that would have forced the big banks to increase their capital requirements. The very general idea is that if banks were compelled to hold more capital, then lending could become more restrained and less cash could be returned to shareholders via dividends and buybacks. Powell was speaking in front of the Senate Banking Committee. Powell also reiterated the need to see more good data to ensure inflation is tracking toward the 2% target, but acknowledged that inflation isn't the only risk the Fed faces as reducing rates too little or too late could weaken economic activity and employment. Rate cut expectations in September changed slightly Tuesday, falling to 71.4% from 75.6% on Monday, according to CME Fed Watch. Abbott on trial: Abbott's premature baby formula trial began Monday. We believe the amount of market cap Club stock Abbott has lost since mid-March greatly exceeds the potential size of a mass settlement, but the stock can't shake off its litigation overhang. "Buying Abbott Laboratories on this weakness is still too early," Jim Cramer said. "The problem is being able to game a jury and we have been unable to do that successfully. We are forecasting a defeat anyway, but this may be the apex of pain." Split selling: Broadcom 's 10-for-1 stock split goes into effect July 15. Our general view around this kind of split is that shareholders like to sell two or three shares after it goes into effect, creating pressure that takes time to digest. Added Jim: "The splits have produced momentary pops and then heavy sales so keep that in your calculation." Ford's time: Stellantis is trying to meet demand for hybrids in Europe," noted Jim. "Could be excellent for Club name Ford which has the most hybrids." Ford reported last week a 56% increase in Hybrid vehicle sales during the second quarter. Up next: There are no major earnings or economic data release Wednesday. At 10am tomorrow we'll hear day 2 of Powell's two-day testimony on Capitol Hill. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) 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. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Customers at a Ford dealership in Colma, California, on July 22, 2022.

David Paul Morris | Bloomberg | Getty Images

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.