It has been a disjointed month for the U.S. stock market. Since the Club’s November Monthly Meeting, investors have largely rotated out of old economy shares and back into tech-focused names. Case in point: The Dow Jones Industrial Average posted its 10th consecutive losing session Wednesday — its worst losing streak in 50 years. Overall, the Dow and S & P 500 fell 3.2% and 1.9%, respectively, from the Nov. 14 monthly meeting to Wednesday’s close, the eve of our December meeting, while the tech-heavy Nasdaq advanced 1.5%. The reason for the market’s divergence is two-fold. First, President-elect Donald Trump’s proposed tariff increases , which some economists believe could drive inflation , have influenced parts of the market more than others. Big Tech names, for example, have been able to mitigate this risk by lowering their exposure to China. They have also built more diversified supply chains to offset weakness from higher levies on foreign-made goods. Secondly, the 10-year Treasury yield has jumped since the last meeting. Higher yields typically hurt rate-sensitive, old economy stocks and send investors back to the tried and true mega-cap tech names that are less sensitive. We’ve been taking advantage of this shift. The Club bought Linde shares Tuesday as investors lumped the stock in with the lagging materials sector, which has been impacted by economic uncertainty. In November, we added to our Dupont position for similar reasons. The portfolio’s monthly winners highlight this market rotation. Four of our five top-performing stocks since November’s meeting are in tech, including Broadcom, Alphabet , Apple , and Amazon . Bulk retailer Costco was the outlier. Here’s how the top names fared over the past 34 days, and what drove the outperformance in each. Broadcom: up 31.2% Most of the gains came after the company’s quarterly earnings report last week, with shares skyrocketing 24% in the session that followed the Dec. 12 release. That was enough to push Broadcom into the $1 trillion market cap club. Wall Street cheered CEO Hock Tan’s remarks about strong demand in the company’s custom AI chip business, which is key to our investment thesis in the stock. The exec said it’s serving three unnamed “hyperscale” customers already — which many speculate to be Alphabet, Meta Platforms and TikTok parent ByteDance — and could have two new custom chip customers in the pipeline. We trimmed our Broadcom position after its parabolic move, locking in a nearly 200% profit. Apple: up 8.7% Shares have been climbing steadily, leading to a number of recent record highs. Earlier this month, Jim Cramer said that Trump’s recent decision to promote Andrew Ferguson to FTC commissioner could help mega-cap tech stocks like Apple. That’s because Ferguson is seen as having a softer stance on antitrust regulation, which has weighed on Apple shares. Optimism about Apple’s AI efforts likely helped investor sentiment, too. Apple launched ChatGPT integration with Siri in newer iPhone models on Dec. 11. Many investors are betting that new innovative features from Apple Intelligence will increase device sales, and usher in an upgrade cycle for the company’s biggest money maker, the iPhone. Alphabet: up 7.3% Although the tech stock initially seesawed after November’s monthly meeting, shares reversed course on a slew of bullish updates in December that lead to record highs. On Dec. 5, Alphabet’s robotaxi unit Waymo announced plans to expand its operations, which followed management remarks in July that the Google parent would invest up to $5 billion in the unit. Shares of Alphabet surged a session later after a federal appeals court upheld a law requiring China-based ByteDance to sell TikTok or face a ban in the U.S. Alphabet would arguable benefit from more advertising revenue share if the popular social media app was no longer available. The stock rose again on Dec. 10 after management announced Willow, a new chip that Alphabet described as a major breakthrough in the field of quantum computing. Costco: up 4.4% Although inflation has cooled, the cost of living remains a large concern for many U.S. consumers, encouraging them to take their business to the low-cost bulk retailer. As a result, the portfolio name has continued to receive praise from Wall Street analysts over the past month, sending its stock higher. What really jolted shares was a solid quarterly earnings report last week, which beat both on the top and bottom line. We liked that paid memberships continued trending higher and saw signs that the warehouse club is taking share from other retailers. Amazon: up 4.3% This tech giant rounded out the list, propelled by excitement around its generative AI efforts. The company announced an additional $4 billion investment in AI startup Anthropic on Nov. 22. Around the same time, Amazon revealed that fellow Club name Apple had been using its custom AI chips. We saw this as a positive sign that management is doubling down on its commitment to the innovative tech. Shares also received another boost from positive data around Black Friday sales, which bodes well for Amazon’s popular e-commerce platform this holiday season. (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 . 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A trader works on the floor at the New York Stock Exchange on Dec. 2, 2024.
Brendan Mcdermid | Reuters
It has been a disjointed month for the U.S. stock market. Since the Club’s November Monthly Meeting, investors have largely rotated out of old economy shares and back into tech-focused names.