Wells Fargo CEO talks reasons to love the stock — plus, why the market is falling

Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street. MARKET PRESSURE: The major averages were lower on Wednesday, with the Dow once again suffering the worst. Bond yields moved higher after a poor auction of $44 billion worth of seven-year notes, adding more pressure to stocks. Although Nvidia bucked the trend and fell overall, its modest gains were well below the incredible gains seen in the past three trading days after last week’s earnings report. American Airlines shares fell about 15% after the company’s sales strategy backfired and it cut growth guidance. Sector Watch: All sectors of the S&P 500 were under pressure on Wednesday, led by energy and utilities. Technology stocks have been hovering in positive territory as Nvidia reversed gains after opening lower. Club members Apple and Microsoft are also in the green. Together, these three account for nearly 49% of the technology sector index. Apple and Nvidia, two “Hold, Don’t Trade” stocks, are also the best-performing stocks in the entire 33-stock club portfolio. Deal driver: ConocoPhillips has agreed to acquire Marathon Petroleum Corp. in a $17 billion all-stock deal. Marathon shares rose about 7.5%, while ConocoPhillips shares fell about 4%. Additionally, Hess shareholders approved the company’s upcoming merger with Chevron. In addition, Merck has reached an agreement to acquire privately held Eyebiotech for $1.3 billion in cash. BANKING NEWS: Here’s a quick update from our Investment Club reporter Morgan Chittum on what Wells Fargo CEO Charlie Scharf said Wednesday at Bernstein’s 40th Annual Strategic Decisions Conference: Scharf Jeff said Wells Fargo has been focusing on investment banking in a “very, very targeted way.” There have been repeated references to the bank’s quiet hiring spree to strengthen its corporate and investment banking (CIB) arm, which we reported on last week. He added that building lucrative underwriting and advisory fee capabilities is “right in front of us” as long-dormant initial public offerings (IPOs) and M&A activity come to life. Schaff said expanding Wells Fargo’s wealth management business into another source of fee-based revenue is “one of the bigger opportunities” in the future. The bank has about 12,000 advisers and is in a better position than it has been in years, the CEO added. We are encouraged by Wells Fargo’s efforts to expand its fee-based business. Schaff said Wells Fargo remains focused on efficiency. The bank has cut its headcount from 275,000 to 225,000. “The conversation about efficiency is less about saving money and more about how we run a better company,” he added. Schaff said that when the Fed lifts the asset cap on Wells Fargo at some point, corporate lending and trading will be growth areas for the bank. He said he scaled back the size of those areas to stay under the Fed’s $1.95 trillion limit. “When you say no to consumers, they’ll always remember it,” Schaaf said. Businesses understand and can win back, he added. The CEO believes it is only a matter of time before the asset cap is lifted, and so do we. Schaff said Wells Fargo in February eliminated a key regulatory penalty by eliminating certain incentive programs for branches. The so-called consent order is related to the bank’s 2016 fake accounts scandal, which predates the Schaff affair. There are several other orders outstanding. Quick success: The FDA granted accelerated approval to Eli Lilly and Company’s Retevmo, a drug used to treat certain advanced or metastatic medullary thyroid cancer in children two years and older. Twelve years and older was the previous age threshold. Elsewhere, HubSpot shares bucked the trend amid further speculation that club name Alphabet is indeed considering a takeover. CNBC’s David Faber believes that if a deal is made, it will be all stock. Next up: Salesforce reports earnings after the close on Wednesday. Comments on AI monetization and what the team is seeing in terms of cross-selling opportunities will be a key focus item. Foot Locker and Best Buy reported premarket Thursday. Costco will report results Thursday night. The same is true for club name revenue, with the exception of Broadcom, which is due to report next month. (See here for a complete list of stocks in the Jim Cramer Charitable Trust.) As a subscriber to Jim Cramer’s CNBC Investing Club, you will receive trade alerts before Jim makes his trades. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation is created or created by any information you receive in connection with the Investment Club. No specific results or profits are guaranteed.

Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street.

About The Author

admin

See author's posts

About The Author

admin

Leave a Reply Cancel reply

Related News

People Also Read