Stocks fell Friday, despite a new coronavirus relief spending proposal that the incoming Biden administration hopes to pass, in a sign that Wall Street players received just what was expected, CNBC’s Jim Cramer said.
President-elect Joe Biden, who is set to take office in five days, presented a $1.9 trillion stimulus wishlist that includes funds intended to assist families and businesses until Covid-19 vaccines are widely distributed.
Despite the economic boost that could come with such a plan, it failed to push the stock market into the black as the major U.S. indexes all completed a negative week of trading.
“When an event occurs and the market gets exactly what it wants, but nothing more, it’s treated as a reason to sell, not to buy,” Cramer said on “Mad Money.” “Biden’s stimulus bill merely met expectations. It didn’t beat the ‘stimulus whisper,’ so to speak.”
The Dow Jones Industrial Average closed at 30,814.26, a 177-point decline and 0.57% shrink from Thursday. The S&P 500 slid 0.72% to 3,768.25 while the Nasdaq Composite fell 0.87% to 12,998.50.
The indexes were all down about 1% or more this week.
Friday’s declines were further compounded by the way that bank stocks traded after several reported quarterly earnings in the morning to kick off earnings season. JPMorgan Chase beat analyst estimates, but the stock dropped 1.79%. Citigroup and Wells Fargo posted mixed results, and their stocks plunged about 7% or more.
Cramer, however, thought those were misguided sell-offs, recommending investors wait three trading days before buying shares of JPMorgan or Wells Fargo, highlighting that banks are preparing to execute stock buybacks and dividend increases this year.
“There are opportunities abounding, you just need to spot them first and figure out if they’re trades or investments,” he said. “With a trade, you have to get out the moment you have a win. With an investment, you want to buy gradually on the way down and then you wait for the story to pay off.”
Cramer gave his game plan for the week ahead. All earnings projections are based on FactSet estimates:
Tuesday: Goldman Sachs, Bank of America and Netflix earnings
- Q4 2020 earnings release: 7:30 a.m.; conference call: 9:30 a.m.
- Projected EPS: $7.39
- Projected revenue: $9.99 billion
“Only a massive earnings beat based on both revenue growth and lower expenses can propel this stock to higher levels,” Cramer said. “A normal beat is not enough, plus we need a super … raised forecast in order for this stock to rally.”
- Q4 2020 earnings release: 6:45 a.m.; conference call: 8:30 a.m.
- Projected EPS: 55 cents
- Projected revenue: $20.58 billion
“Like Goldman Sachs, Bank of America’s coming in smoking. In the last couple months, well, it’s surged from $24 to $33,” he said. “Once again, when the expectations are this high, it’s not enough to be good, you’ve gotta be great.”
- Q4 2020 earnings release: 4 p.m.; conference call: 6 p.m.
- Projected EPS: $1.36
- Projected revenue: $6.62 billion
“I do think Netflix may finally be suffering from some fatigue, thanks to all the new competition these days,” the host said. “If Netflix wants to get its groove back, it needs to blow away the numbers, but I am not holding my breath.”
Wednesday: UnitedHealth, Procter & Gamble and Morgan Stanley earnings
- Q4 2020 earnings release: before market; conference call: 8:45 a.m.
- Projected EPS: $2.41
- Projected revenue: $64.98 billion
“I expect yet another incredible, amazing quarter that still seems to surprise people,” Cramer said. “The company’s a machine — a money machine — and I would not be surprised if they also raise their forecast very big, too.”
- Q2 fiscal 2021 earnings release: before market; conference call: 8:30 a.m.
- Projected EPS: $1.51
- Projected revenue: $19.26 billion
“I’m expecting a picture-perfect quarter from Procter & Gamble,” he said.
- Q4 2020 earnings release: 7:30 a.m.; conference call: 8:30 a.m.
- Projected EPS: $1.30
- Projected revenue: $11.58 billion
“It would shock me if Morgan Stanley somehow fails to beat the expectations,” the host said. “CEO James Gorman has navigated the brokerage waters better than anyone, except for maybe the people at Robinhood. The only problem I see here is with Gorman himself. He’s so darned self-effacing that he may make the quarter sound less impressive than it is.”
- Q4 2020 earnings release: after market; conference call: Thursday, 10:30 a.m.
- Projected losses per share: $6.58
- Projected revenue: $3.44 billion
“Can United Airlines give these stocks a shot of oxygen? If we have a good vaccine day, then the answer is yes,” he said. “Otherwise, it just will not matter.”
Thursday: Union Pacific, IBM, Intel, CSX and United Airlines earnings
- Q4 2020 earnings release: 8 a.m.; conference call: 8:45 a.m.
- Projected EPS: $2.24
- Projected revenue: $5.09 billion
“The really good news, though, is that the rails now have a propensity to rally no matter what and that’s because of efficiencies and expense controls that had been lacking,” Cramer said.
- Q4 2020 earnings release: after market; conference call: 5 p.m.
- Projected EPS: $1.81
- Projected revenue: $20.65 billion
“We think IBM’s going to introduce the management team of what’s affectionately called Newco, the services spinoff that represents the old IBM,” he said. “I think the Street will like what it hears.”
- Q4 2020 earnings release: after market; conference call: 5 p.m.
- Projected EPS: $1.10
- Projected revenue: $17.46 billion
Intel “just shook up the joint bringing in a new CEO (Pat Gelsinger) after the company suffered some multiple sales misses,” the host said. “I bet he will do a fine job at Intel, too.”
- Q4 2020 earnings: after market; conference call: 4:30 p.m.
- Projected EPS: $1.01
- Projected revenue: $2.77 billion
“I like what I see as industrial cargoes grow stronger. If it sells off in response to Union Pacific, I’m probably going to be a buyer,” he said.
Friday: Schlumberger earnings
- Q4 2020 earnings release: 7 a.m.; conference call: 8:30 a.m.
- Projected EPS: 17 cents
- Projected revenue: $5.23 billion
“I don’t expect the quarter to be strong, but the rig count has been rising week after week after week, and that is always good news for the stock known as Slob,” Cramer said.
Disclosure: Cramer’s charitable trust owns shares of Goldman Sachs, JPMorgan Chase and Wells Fargo.
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