Every weekday, the CNBC Investing Club with Jim Cramer does a live “morning session” at 10:20am ET. Here’s a recap of Wednesday’s key moments: We’re cautiously watching bond yields. The meme craze could be a sign of froth on the Nasdaq. We’ve cut two Club stocks: DHR, LIN Costco remains top retail stock 1 We’re cautiously watching bond yields Bond yields are starting to rise again, with 2-year Treasuries above 3.35% on Wednesday , marking its highest level since the stock market’s recent bottom in mid-June. The benchmark 10-year Treasury yield rose to more than 2.9%. Higher bond yields, which move in the opposite direction of bond prices, tend to hurt growth stocks, many of which are tech names. When yields rose earlier this year, stocks certainly paid the price. This is because higher yields and interest rates make the promise of future earnings less valuable and also make borrowing more expensive to fuel growth. In March, we explored how rates affect equity valuations. The tech-heavy Nasdaq was the biggest loser on Wednesday, down about 1.3%. The S&P 500 and Dow Jones Industrial Average fell less than 1%, respectively. We are being cautious and carefully monitoring bond yields for any signs that the stock market may weaken again. Since its mid-June low, the S&P 500, even with Wednesday’s drop, has gained 17%. However, the index was still down more than 10% year to date. 2. Meme craze could be a sign of froth on the Nasdaq The resurgence of meme stocks in August could signal a froth in a market that has been moving rapidly higher of late. Regardless of the exchange these stocks trade on, the frenzy around them tends to hurt the Nasdaq. Shares of Bed Bath & Beyond ( BBBY ) rose about 20% on Wednesday, a day after closing up 29%. Buoyed by Reddit traders, the stock surged 70% at one point and is up nearly 300% since August 4. Hong Kong-based fintech AMTD Digital (HKD) soared in early August, with shares up 2,300% from their IPO price of $7.80 last month . All in all, around $189 per share on Wednesday, AMTD Digital traded as high as $2,555.30 on August 2nd. This was 32,656% higher than the July offer price. The recent flurry of meme stock activity is reminiscent of the meme stock frenzy of 2021, which saw GameStop ( GME ) shares pushed to stratospheric heights as traders on Reddit’s WallStreetBets forum piled on into stocks and pulled short-selling hedge funds. Like what happened then, we worry that the Nasdaq could take a hit once the meme stock craze hits its peak. The Nasdaq is susceptible to volatility and will likely see some declines, which could affect club names like Apple ( AAPL ) and Amazon ( AMZN ), which remain big stocks. Jim Cramer warned investors on Tuesday’s “Mad Money” to trade speculative plays, including meme stocks, for boring, stable plays, and we echo that advice for club members. 3. We Shorted Two Club Stocks: DHR, LIN While there is no change in our thesis for Danaher (DHR), we sold some shares after the stock’s recent run simply because we have a large position in stocks and we are looking to strengthen our portfolio. . We also removed some shares from our Linde (LIN) position. Although it has had a good run over the past two weeks, we are wary of how a worsening economic outlook in Europe could hurt the company. Jim said that if the club names see a drop in the market, perhaps 1% to 3%, he would consider redistributing the capital raised from those sales. 4. Costco remains top retail stock Retail giants continue to report earnings this week, with Lowe’s ( LOW ) experiencing a mixed quarter, while Target ( TGT ) missed Wall Street’s earnings expectations. We still recommend that investors pick up shares of Costco ( COST ) if they want to be in a well-run retail stock, although Jim also thinks Lowe’s and Home Depot ( HD ) have good prospects. Costco has not reported on supply chain and inventory challenges, and has a successful pricing strategy, increasing our confidence in the company and its ability to continue weathering economic headwinds. (Jim Cramer’s Charitable Trust is long AAPL, AMZN, COST, DHR, LIN. See a full list of stocks here.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his charitable trust portfolio. If Jim has discussed a stock on CNBC TV, wait 72 hours after issuing the trade alert before executing the trade. INFORMATION ON THE ALTERNATE INVESTMENT CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, WITH OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS OR IS CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTOR CLUB. NO SPECIFIC RESULTS OR BENEFITS ARE GUARANTEED.
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