Caterpillar soared in Friday’s big stock market rally that went way beyond tech
Wall Street saw a broad-based rally on Friday, with sleepier parts of the market like industrials driving the lagging Dow higher by 2%. One of the leaders in the rally was Dow stock Caterpillar, which surged more than 8% and accounted for over 100 points of the 30-stock average’s 700-point surge. Before the rally, Jim Cramer had said that CAT was one of the most undervalued stocks in their portfolio. Meanwhile, tech darlings like Nvidia and Meta Platforms took a relative backseat on Friday as the Nasdaq rose by 1%, catapulting the index to a 52-week high. The S&P 500 on Friday gained around 1.5%.
The Nasdaq has been the clear winner this year as investors jumped aboard the AI hype train. After a difficult 2022, tech regained its shine this year, with Nvidia’s industry-leading hardware and software leading the charge. The chip designer’s market valuation briefly entered the rarefied air above $1 trillion earlier this week, following a rally of about 30% after its blowout earnings report. Nvidia’s stock price has rocketed about 170% higher so far this year.
While AI optimism isn’t entirely misplaced, those companies poised to benefit from the trend aren’t the only ones with quality fundamentals, and until Friday, the languishing stocks in other sectors suggested otherwise. The change in leadership that played out on Friday was heartening and could continue. Club industrials Honeywell and Emerson Electric also prospered on Friday along with Club oils Coterra Energy and Pioneer Natural Resources.
FAQs:
What is the Dow Jones Industrial Average?
The Dow Jones Industrial Average (DJIA) is a stock market index that measures the stock performance of 30 large publicly owned companies based in the United States.
What is the Nasdaq?
The Nasdaq is a global technology stock market index that includes over 3,000 equities. It is associated with the National Association of Securities Dealers Automated Quotations (NASDAQ).
What is the S&P 500?
The S&P 500 is a stock market index that measures the stock performance of 500 large companies listed publicly in the United States.
What is Nvidia?
Nvidia is a technology company that designs graphics processing units (GPUs) for gaming and professional markets, as well as system on a chip units (SoCs) for the mobile computing and automotive market.
What is Caterpillar?
Caterpillar is an industrial manufacturer that produces machinery and equipment for construction, mining, and energy industries. It is a member of the Dow Jones Industrial Average.
What is the CNBC Investing Club with Jim Cramer?
The CNBC Investing Club with Jim Cramer is a club that offers trade alerts and investment advice to its subscribers. Jim Cramer is a host on CNBC and a former hedge fund manager.
Friday’s stock market rally exceeded tech, as Caterpillar saw a sharp increase.
On Friday, there was a broad-based rally on Wall Street as previously slower industries, such as industrials, fueled the lagging Dow Jones Industrial Average up by 2%. Dow stock Caterpillar (CAT) was among the leaders, surging more than 8% and contributing over 100 points of the 30-stock average’s 700-point surge. Meanwhile, the tech darlings that have recently driven the market higher, including top-performing Club stocks Nvidia (NVDA) and Meta Platforms (META), took a backseat. However, the tech sector still advanced, boosting the Nasdaq by 1% and catapulting the index to a 52-week high. The S&P 500 split the difference, climbing roughly 1.5%. The top three performing sectors in the S&P 500 on Friday were materials, industrials led by Caterpillar, and energy led by Halliburton (HAL). Jim Cramer expressed enthusiasm about the wider rally, saying that they run a diversified portfolio and don’t want one-quarter of it driving everything. The reasons behind Friday’s move, including a strong but not too strong May jobs report and congressional approval of legislation to raise the debt ceiling, offer hope that the rally may continue. However, it is too early to tell whether this hope is misguided. The Nasdaq has been the clear winner this year due to the AI hype train, with Nvidia being the train’s locomotive. After a difficult 2022, tech has regained its shine. Other large-cap technology Club stocks also performed well, such as Facebook and Instagram parent Meta, which set a new 52-week high Friday. Overall, Friday’s change in leadership was heartening as it signaled that those companies poised to benefit from the AI trend are not the only ones with quality fundamentals.