Stocks stumble on inflation fears, but 2 names give us reasons to stay bullish
Tech
Friday’s market rally was not enough to flip stocks into the green last week as surging oil prices and bond yields stoked renewed concerns about inflation and the Federal Reserve’s next move. The Dow Jones Industrial Average , the S & P 500 , and the Nasdaq all pared their weekly losses in Friday’s trading — each with nearly 1% gains at the close — as crude and rates came off the boil. While able to break their four-session losing streaks, the Dow led the declines during the holiday-shortened week, falling 1.6%. The S & P 500 and Nasdaq lost 0.8% and 0.7%, respectively, on the week. Escalating tensions between the U.S. and Iran sent West Texas Intermediate above $100 per barrel on Thursday for the first time in nearly four months . Even with Friday’s decline, WTI rose more than 9% last week. The yield on the 10-year Treasury on Thursday topped out above 4.95%, its highest level since October 2023. Bond yields, which also took a breather Friday, have been moving lockstep with rising crude prices on worries that higher energy costs could keep inflation elevated and necessitate an interest rate hike at this coming week’s Fed meeting. It wasn’t all doom and gloom last week, as Club names Meta Platforms and Apple gave us fresh reasons to be optimistic about their long-term artificial intelligence opportunities. Here’s a closer look at three developments that drove our portfolio last week. Fed rate hike looks increasingly likely Inflation data last week did little to ease concerns about a Fed rate increase at its upcoming meeting. Thursday’s producer price index rose 0.4% for the month, in line with expectations, while Friday’s consumer price index showed headline inflation also increasing 0.4% month over month and 3.4% from a year earlier. Core CPI, which excludes food and energy, rose 0.3% on the month, slightly more than expected. These are the final major inflation indicators the Fed will see before its Sept. 15-16 gathering. The market odds of a September Fed rate hike went to 87%, up from 58% the week prior, according to the CME FedWatch tool . A second rate increase before the end of the year is also starting to come into the frame. Meta’s AI strides get harder to ignore Meta’s latest artificial intelligence releases are putting the stock’s undemanding valuation in a new light. The Muse Spark 1.3 model — out on Sept. 2 — quickly emerged as a credible competitor to frontier models from OpenAI and Anthropic. Meta followed that up last week, with the launch of its Muse personal AI agent , which integrates with Facebook, Instagram, and Whatsapp, leveraging their 3.6 billion daily active users. Together, the releases strengthen the case that Meta’s massive AI investments are creating valuable assets that will make money. That potential still doesn’t appear to be fully reflected in the stock. Meta trades at roughly 19 times 2027 earnings estimates despite expected revenue growth in its core Family of Apps business of 20%. The company’s vast computing infrastructure adds another layer of optionality, whether Meta uses that capacity internally or eventually sells excess compute through a public cloud, which Jim Cramer favors. That’s why Meta is Jim’s favorite “Magnificent Seven” name and why we said that investors should start building a position . We have a buy-equivalent 1 rating on the stock. Shares of Meta gained 5% last week. Apple brings back the ‘wow factor’ Apple’s foldable iPhone launch last Wednesday had what Jim called a real ” wow factor .” The iPhone Duo, starting at $1,999, gives Apple a new form factor rather than another incremental upgrade to its flagship device. The new iPhone 18 Pro and Pro Max received the expected hardware improvements along with $100 price increases, which should help offset higher memory costs without — in our view — significantly damaging demand. Apple shares gained nearly 4% on the week. The bigger long-term development may be AI. New Apple CEO John Ternus positioned the iPhone as an “intelligent personal hub,” with an AI-upgraded Siri able to tap into more than 300,000 apps. That puts Apple squarely into the emerging battle for personal AI agents alongside Meta’s Muse and SpaceX’s Grok Bot. We don’t view that market as winner-take-all. Consumers could ultimately use several agents for different tasks. Apple’s advantage is its ability to deeply integrate AI into a device already embedded in hundreds of millions of users’ daily lives. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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Stocks stumble on inflation fears, but 2 names give us reasons to stay bullish
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