CNBC’s Jim Cramer shared his list of the top 10 things to watch in the stock market on Thursday, September 28, 2023. Here are some of the highlights from his Mad Money show:
Fed decision and market reaction
Cramer said the Federal Reserve’s decision to keep interest rates unchanged was expected, but the forecast of another rate hike before the end of the year spooked some investors. He said the market was on track for its third consecutive day in the red, as the 10-year Treasury yield rose to 4.48%, its highest level in 15 years. He said the 20-year Treasury yield was about to de-invert, meaning that the long-term rates were higher than the short-term rates, which was a sign of economic strength.
Cisco’s big acquisition
Cramer praised Cisco’s (CSCO) $28 billion deal to buy cybersecurity company Splunk (SPLK), saying it was a smart move to diversify its portfolio and boost its growth. He said Splunk’s CEO Gary Steele would stay on as a member of Cisco’s executive team, reporting to Cisco’s CEO Chuck Robbins. He said the acquisition was one of Cisco’s largest and continued its buying spree this year.
FedEx’s strong earnings
Cramer was impressed by FedEx’s (FDX) earnings beat and raise for its fiscal first quarter, saying it delivered on all fronts. He said the company added about 400,000 packages in average daily volume, and its Express and Ground divisions posted strong operating income growth. He said the company’s “drive” program to consolidate operating companies led to $1.8 billion in savings. He said several Wall Street firms raised their price targets on FedEx this morning.
Apple’s pricing power
Cramer cited a survey by Evercore ISI that showed that Apple (AAPL) had pricing power when it came to iPhones, saying it was a positive sign for the iPhone 15 launch. He said the survey of about 4,000 iPhone users indicated that the demand was solid for the higher-end Pro and Pro Max models. He said the modem chip in the new phones was all on Qualcomm (QCOM), as Apple was unable to design and build its own chip in time.
Auto workers strike update
Cramer said the auto workers strike was a serious issue for the industry, as the United Auto Workers union rejected a new contract offer from Stellantis (STLA), and threatened more work stoppages if talks went nowhere. He said the union was striking one plant each at Stellantis, General Motors (GM) and Ford Motor (F), demanding better wages and benefits. He said the strike could affect the supply and demand of vehicles, as well as the inflation outlook.
Lululemon and Peloton’s partnership
Cramer was bullish on the partnership between Lululemon (LULU) and Peloton (PTON), saying it was a win-win situation for both companies. He said Peloton would provide its branded merchandise to be made by Lululemon, and its content to be featured on Lululemon’s exercise app. He said Lululemon would stop selling Mirror, its interactive fitness device, which had disappointing sales and led to a $443 million impairment charge. He said Peloton’s shares soared 15% on the news, and it was the first time Peloton shared its content.
Costco’s gold rush
Cramer said Costco (COST) was selling out of 1-ounce gold bars at roughly $2,000 at a less than 1% markup, saying it was a sign of people’s preference for gold in tough times. He said he asked Costco’s CEO Craig Jelinek for his opinion on the phenomenon, and Jelinek said it also drove people to Costco’s website. He said Costco’s same store sales comps were expected to be the lowest since 2017, but it still had growing traffic and membership. He said Costco had held off on a fee hike.
CrowdStrike’s target operating model
Cramer said CrowdStrike (CRWD) was his top pick in the cybersecurity space, after the company provided an updated target operating model at its Analyst Day on Wednesday. He said the company expected “significant” free cash flow margin expansion over the next three to five years, which was well ahead of Street expectations. He said several analysts raised their price targets on CrowdStrike, including Wedbush, which increased it to $200 from $170.
Darden’s mixed results
Cramer said Darden (DRI), the parent company of Olive Garden and other restaurant chains, beat on earnings and sales in its quarterly report, but its fine-dining segment had weaker than expected same-store sales. He said the company faced labor and supply chain challenges, as well as rising food costs. He said the company raised its full-year guidance, but warned of uncertainty due to the pandemic.
Boston Scientific’s EPS forecast
Cramer said Boston Scientific (BSX), a medical device maker, raised its EPS forecast at its 2023 Investor Day presentation, saying it had a strong pipeline of products and a diversified portfolio. He said several analysts raised their price targets on Boston Scientific, including Mizuho, Baird, UBS and Stifel.