What a week on Wall Street. The market breathed a sigh of relief after the midterms, following a couple of up-and-down sessions to start the week. Buyers came out of the woodwork Wednesday — not necessarily because of any one outcome but because the voting was over. The Dow surged 3%, while the S & P 500 and Nasdaq each rose about half as much, reflecting broad appetite for stocks. The idea that a Democratic wave might slow the data center buildout simmered beneath the surface, pressuring key pockets of the AI trade. Jim Cramer cautioned that the first-day reaction to Tuesday’s election, which saw Democrats flip both the House and the Senate, along with a handful of swing-state gubernatorial races, might be overly optimistic. Then, Thursday happened. Jim’s warning that the prior day’s rally might not accurately reflect how investors felt proved prophetic. The Dow, S & P 500, and Nasdaq had their worst single sessions since April 2025. The Nasdaq plunged 5.5% into correction territory — defined as a drop of at least 10% from recent highs. The tech-heavy index’s record high was just over a month ago. The tech selling, however, was not completely out of the blue. The AI trade had been wavering for weeks as concerns mounted about the extraordinary levels of borrowing to bring more computing capacity online. The Nasdaq saw a few nasty sell-off days in the run-up to the election. Along the way, the more defensive parts of the market, from healthcare to consumer staples, were moving higher. There were few places to hide in Thursday’s market. The buildout stocks were the epicenter of selling again, on fears that if fewer data centers come online in future years, the projected earnings for chipmakers and power companies are too lofty, and the stocks aren’t actually getting cheaper as they decline. Micron lost more than 17% on the session, while Intel and Nvidia lost over 10% and 9%, respectively. (The three stocks were also our worst performers for the week). One stock that finished the day in the green was Cardinal Health , which reported an impressive quarter before the bell. We used that strength to book big profits and pad our cash position. We also trimmed Eli Lilly . As Jim always says, you can’t just sell losers. We still love both those stocks. (Cardinal Health was up 8.5% for the week and was our best performer.) Down but not out, the market made a stand Friday. While the Dow was modestly lower, the S & P 500 and Nasdaq staged decent bounce-back rallies. Like Wednesday, a note of caution about whether Friday’s tech buying is for real is warranted. When it was all said and done, the Dow lost 1% last week, while the S & P 500 and Nasdaq sank 2.7% and 3.4%, respectively. Unfortunately, November has picked right up where October left off, with tech slumping and the defensive parts of the market on the upswing. With the dust settling from this up-and-down week, two things are becoming clearer. First, not every AI-related company would be hurt equally if the data center buildout slows down. The neoclouds, like CoreWeave , that need financing to grow are the most vulnerable. The established hyperscalers, including Club names Amazon , Alphabet , and Microsoft , might not grow as much if the AI boom cools off, but they are still in the pole positions because of their massive scale. They could also rein in spending, which many investors would welcome. The demand for compute, as we have learned time and again this earnings season, remains off the charts. Second, as Jim has said repeatedly, this market underscores why owning a diversified portfolio is such an important strategy for staying in the game. So, against that backdrop, what have we been doing to protect our gains and pivot the portfolio to the new realities? On Friday, Jim held the CNBC Investing Club’s 4th Annual Meeting to communicate his strategy. Put simply, he said he wants to continue to lighten up on data center and lean into non-AI. “I want to circle the wagons around the best and redeploy capital into other, less risky stocks, continuing my paring, going for the best and taking losses if we have to, to get to higher ground.” He shared the stage at the New York Stock Exchange with portfolio director Jeff Marks. They updated their views on every name in the portfolio and mentioned two stocks to buy: FedEx and Kimberly-Clark . We bought more of these about a month ago. In addition to those Cardinal and Lilly trades, we were actively trading last week to get bigger in non-tech (added to Boeing and Goldman Sachs ) and to beef up our cash position (also trimmed DuPont , twice). With more than 15% of the Club portfolio in cash, Jim said at the Annual Meeting, we have ample dry powder. But, uncharacteristically, he added, “It’s not burning a hole in my pocket.” (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Decisive election. Dramatic stock swings. How we handled the market last week
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