Stocks closed higher on Friday after the monthly jobs report delivered the Goldilocks numbers investors had hoped for: not strong enough to cause inflation, but not weak enough to cause recession fears. Still, it wasn’t enough to push all three major stock averages into positive territory this week. The Dow fell 1.26% for the week, while the S&P 500 fell 0.3%, as the usual suspects of soaring oil prices and rising long-term bond yields put pressure on many parts of the market. Only the Nasdaq managed to gain 0.45%. What else? — The demand for all kinds of artificial intelligence. On Friday, club stock Nvidia hit its highest price for the first time since May, while CrowdStrike, Palo Alto Networks and AMD all hit new highs as well. Here, we take a closer look at three trends that drove movement in our portfolio last week. Sometimes bad news is good news, but sometimes weak economic data is all that’s needed to get stock prices up again. The U.S. economy added 29,000 jobs last month and the unemployment rate rose to 4.2%, according to the September nonfarm employment report. This was significantly lower than the Dow Jones consensus of 84,000 job growth and 4.1% unemployment. But it was weak enough to make the Fed more likely to leave rates unchanged rather than raise them at its late October meeting. This was evidenced by the lower-than-expected personal consumption expenditure (PCE) price index for August released on Wednesday. It is the Fed’s preferred inflation indicator. Based on both of these key data points, markets are pricing in a 78% chance that the central bank will maintain policy in October, compared to a 36% chance a week ago, according to the CME FedWatch tool. Despite a tough week overall, Friday’s jobs report was enough to lift stocks. The Dow rose 0.5% on Friday, the S&P rose 0.7% and the Nasdaq rose 1.2%, retreating slightly from those levels after hitting all-time highs earlier in the day. There was also good news as oil prices, which have long been a drag on stock prices, fell on Friday, further supporting stocks as the Iran war drags on, following reports that European countries are considering releasing strategic fuel reserves. Micron’s positive outlook Micron reported another strong quarter on Wednesday, but the bigger takeaway was management’s outlook on supply-demand imbalances and the outlook for strong stock buybacks. Revenue rose 379% year over year to $54.23 billion, and adjusted earnings per share of $33.42 also exceeded expectations. Micron expects this momentum to continue, with revenue of $61.5 billion and adjusted EPS of $38.15 in the first quarter of fiscal 2027, both of which beat Wall Street expectations. Still, the stock came under pressure, ending the week down 0.7% as investors focused on plans to increase spending on manufacturing capacity. The worry is that increased supply could ultimately push down memory prices and profits. But Micron expects conditions in 2027 and 2028 to be even tougher than in 2026, with about 75% of expected production in 2027 already said. We also signed 26 strategic customer agreements, up from 16 in the previous quarter, giving us greater visibility into future demand. We are trying to overcome the post-earnings slump. Jim called the outlook for the next few years “the best I’ve ever heard.” Another opportunity could come in December, when the CHIPS Act’s funding restrictions are eased, allowing Micron to deploy increasing amounts of cash for a major stock buyback. We raised our price target from $1,100 to $1,200 and reiterated our rating of 1, equivalent to “buy.” Nvidia’s Larger Stock Repurchases Nvidia gave investors what Jim was looking for: larger stock buybacks. The chipmaker approved an additional $150 billion in stock buybacks, bringing the remaining authorization to $235 billion. Wall Street expects NVIDIA to generate about $440 billion in free cash flow over the next six quarters, giving management enough firepower to buy back its own stock without sacrificing the investments needed to maintain its AI leadership. The move is especially significant given the disconnect between Nvidia’s business and stock price performance. The stock is up about 24% this year, but it’s one of the worst performers in the iShares Semiconductor ETF, even though adjusted EPS has more than doubled in consecutive quarters. Thankfully, the stock is starting to perform well, and while it fell short of its record closing price on Friday, it hit a new intraday high set in May. Nevertheless, the enhanced buyback program strengthens the investment case going forward. While the $150 billion increase is less than the $500 billion Jim had requested, it is a big step toward leveraging Nvidia’s massive cash generation for the benefit of shareholders. As Jim said in Friday morning’s meeting, NVIDIA management has shown investors that NVIDIA stock is the best thing to own right now. The stock ended the week up 3.95%. (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
