Friday’s market gains weren’t enough to turn stocks around last week, as spikes in oil prices and bond yields renewed concerns about inflation and the Federal Reserve’s next action. The Dow Jones Industrial Average, S&P 500 and Nasdaq pared their weekly losses in Friday trading, each ending up nearly 1% as oil and interest rates come out of the boil. The Dow Jones Industrial Average was able to end a four-session losing streak, but led the decline during the holiday-shortened week, falling 1.6%. The S&P 500 and Nasdaq fell 0.8% and 0.7%, respectively, for the week. West Texas Intermediate soared above $100 a barrel on Thursday for the first time in nearly four months due to escalating tensions between the United States and Iran. Despite Friday’s decline, WTI rose more than 9% last week. The yield on the 10-year U.S. Treasury rose above 4.95% on Thursday, the highest level since October 2023. Bond yields also eased Friday, but have moved up in tandem with rising oil prices as rising energy costs keep inflation high and concerns the Fed will need to raise rates at next week’s meeting. It wasn’t all doom and gloom last week, as Metaplatform and the club name Apple gave us new reason to be optimistic about long-term artificial intelligence opportunities. Here, we take a closer look at three trends that propelled our portfolio last week. Fed rate hike likely increases Last week’s inflation data did little to allay concerns about the Fed raising rates at its next meeting. Thursday’s producer price index rose 0.4% for the month, in line with expectations, and Friday’s consumer price index also showed headline inflation rose 0.4% month-on-month and 3.4% year-on-year. Core CPI, which excludes food and energy, rose 0.3% from the previous month, slightly higher than expected. These will be the last major inflation measures the Fed will confirm before its Sept. 15-16 meeting. According to the CME FedWatch tool, market odds of a September Fed rate hike are 87%, up from 58% the previous week. A second interest rate hike by the end of the year is also on the horizon. Meta’s AI advances can no longer be ignored Meta’s latest artificial intelligence release sheds new light on the stock’s grim valuation. Released on September 2nd, the Muse Spark 1.3 model quickly emerged as a reliable competitor to OpenAI and Anthropic’s Frontier models. Last week, Meta launched its Muse personal AI agent that integrates with Facebook, Instagram, and Whatsapp, leveraging its 3.6 billion daily active users. Taken together, these releases strengthen the case that Meta’s large-scale AI investments are generating valuable assets that will lead to returns. It seems that its potential has not yet been fully reflected in the stock price. Meta trades at about 19 times projected 2027 earnings, despite forecasted 20% revenue growth for its core app family business. The company’s vast computing infrastructure adds another layer of options for Meta to use that capacity internally or ultimately sell excess compute via the public cloud (which Jim Cramer supports). This is why we said Meta is Jim’s favorite “Magnificent Seven” name and investors should start building positions. Our stock rating is “1”, which corresponds to “buy”. Meta’s stock price rose 5% last week. Apple brings back the ‘wow factor’ Apple’s foldable iPhone, launched last Wednesday, had what Jim calls a real “wow factor.” The iPhone Duo starts at $1,999 and gives Apple a new form factor rather than an additional upgrade to its flagship device. The new iPhone 18 Pro and Pro Max receive expected hardware improvements along with a $100 price increase, which should help offset rising memory costs without significantly hurting demand. Apple stock rose nearly 4% this week. A bigger long-term development may be AI. Apple’s new CEO, John Ternas, has positioned the iPhone as an “intelligent personal hub” with AI-enhanced Siri accessing more than 300,000 apps. This puts Apple squarely in the new 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 may eventually use multiple agents for different tasks. Apple’s advantage is that it can deeply integrate AI into devices that are already part of the daily lives of hundreds of millions of users. (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 the 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.
