New data strengthens our faith in a TJX comeback. Plus, the Nvidia-Microsoft PC is here
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks dipped from record highs Wednesday. Rising interest rates were a headwind for most of the session, with the yield on the 10-year Treasury note touching 5.35% at one point, its highest level since 2002. But bonds were able to rally in reaction to solid demand for the Treasury Department’s sale of $39 billion in 10-year notes at 1 p.m. ET. That pushed bond yields lower and helped stocks recover most of their early losses. Bond prices move inversely to yields, so poor demand for the Treasury notes could have caused interest rates to spike even higher, which is why the market is paying close attention to these auctions. The next one to monitor is 1 p.m. ET Thursday, when the U.S. sells $22 billion of 30-year bonds. TJX Companies shares have made a nice bounce off their mid-September low. They’re trading above $139 on Thursday, up more than 13% from their $122.84 close on Sept. 16. Still, the off-price retail stock is down about 8% since it reported earnings in mid-August. Part of this decline was tied to macro concerns about inflationary pressures and interest rates, which have impacted the entire retail segment. The other was self-inflicted problems in its fiscal 2027 second quarter. Marmaxx — the company’s largest segment that includes its TJ Maxx and Marshalls banners — experienced a significant slowdown in comparable sales growth to just 1%, below the consensus for 3% growth. The company chalked the deceleration up to having the wrong “mix,” or assortment of in-demand inventory. It’s rare for TJX to have the wrong merchandise, and the slowdown raised concerns about competitive pressure and market-share loss to rival Ross Stores . For comparison, Ross Stores shares are off about 4% since the day before TJX’s August earnings report, underscoring the tough tape for retailers. Morgan Stanley weighed in on this macro versus micro debate on Wednesday. Based on its survey work, Morgan Stanley believes the issues that plagued the second quarter was macro related and not something structurally tied to the TJX brand. Backing this view was that 69% of respondents said cutting back on their overall spending was a reason why they are spending less at TJ Maxx and Marshalls versus a year ago. Additionally, 37% of respondents said that prices are higher than what they are willing to pay. The survey also showed that TJ Maxx and Marshalls remained in first and second place among off-price retailers in brand perception, ahead of Burlington and Ross Stores’ Ross Dress for Less. The data suggests TJX hasn’t lost its way, and a better consumer backdrop would support an acceleration. The recent rebound in TJX shares shows the market is feeling that way. If there were significant market-share loss, TJX would lose some of the premium price-to-earnings multiple it has over traditional department stores. One caveat is that Morgan Stanley thinks TJX is unlikely to see an inflection in its third-quarter results due to soft data, and it’s looking at the fourth quarter at the earliest for a comparable sales growth inflection. So, while the analysts reiterated their buy-equivalent rating and said it would use ongoing weakness as a buying opportunity, which we agree with, we are mindful that a difficult macro backdrop of high inflation and interest rates creates a tough near-term setup for retail. But if there’s one category that can grow through these challenges, it’s off-price because of the value it offers customers. We’ve bought the post-earnings dip in TJX on three occasions (Sept. 17, Aug. 26 and Aug. 21). The promised Microsoft-Nvidia laptop is here. The Surface Laptop Ultra leverages Microsoft’s PC and Windows DNA and Nvidia’s new RTX Spark chip. Earlier this year, when announcing its Arm-based RTX chip, Nvidia said it was working with Microsoft to create the world’s first Windows PC purpose-built for personal AI agents. During Wednesday’s Microsoft event, company executives showed off the Surface Laptop Ultra. Preorders are now open for the device, which starts at nearly $2,600. Shipping begins on Oct. 16. In a veiled jab at Apple’s stripped down Macs, the specs on the Surface site boast “no dongles necessary,” because the new device includes USB-C, USB-A, HDMI ports, as well as a headphone jack and a full SD card reader. The Ultra has magnetic USB-C port, which is kind of like Apple’s MagSafe charging plug. The Surface Laptop Ultra can run AI models on the machine, without the high monthly bills of engaging with cloud-based models and agents. Microsoft also announced the Surface RTX Spark Dev Box, a souped-up machine starting at nearly $6,000, designed to give developers everything they need to work on AI right out of the box. Given the current concerns about AI token budgeting, energy demand, and general lack of computing components, Microsoft is clearly looking to bring the compute needed to run AI workloads to your desk and out of the data center. The Dev Box is certainly not a computer for the masses. The Surface Laptop Ultra might have some wider appeal. But with all the lower-cost laptops out there, it might also be a bit specialized. We’ll see a couple of reads on the consumer over the next 24 hours, when Levi Strauss reports after the closing bell on Wednesday and PepsiCo reports before the opening bell on Thursday. There are no major economic releases scheduled for Thursday. Initial jobless claims are due out at 8:30 a.m. ET. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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