An Iran war-driven rise in oil prices crushed stocks last week, capping the S&P 500’s first three-week losing streak in nearly a year. There was little room to hide, with nine of the 11 S&P 500 sector indexes down for the week. Not surprisingly, power and utilities are the winners. Brent crude, the international benchmark, and West Texas Intermediate crude, the American standard, have jumped 11% and 8%, respectively, over the past five trading sessions. In fact, on Thursday, Brent settled above $100 for the first time since 2022. Both Brent and WTI rose above $119 on Monday before retreating and then grinding again. For the week, the S&P 500 fell 1.6%. As long as Iran blocks oil tankers or threatens to attack in the Strait of Hormuz, the war will continue — and with it more volatility, argues Jim Cramer. After tracking Middle East developments all week, here’s how we navigated the market — plus two other themes that influenced our portfolio. How we played it, Jim advised members to sit on their hands for most of the week as the conflict continued in the Middle East and the headlines sent oil everywhere. He cautioned against trying to get out of the stock market completely during times of trouble. It is impossible to know when to turn back and risk missing out on a rally that occurs after the battle is over. “Trust me, you’re kicking yourself if you sell everything and then you have to watch this market rebound without you,” he said Thursday during “Mad Money.” As the week wore on, Jim said it was time to buy as our trusty S&P Short Range Oscillator oversold. We added to our Procter & Gamble position on Wednesday. In the session that followed, we put up a shopping list of five stocks to buy as most of the portfolio was restricted. Even though our hands are tied, we always want to let members know what we are thinking. On Friday, once we were able to bounce back, we nibbled on some Alphabet shares. Looking ahead, we believe the oscillator is likely to reach minus-10%, which has historically been a good time to buy. The oversold limit starts at minus-4%. The recent rise in oil prices has clouded the inflation outlook, relegating this week’s pair of usually critical economic reports – February’s consumer price index and January’s personal consumption expenditure price index – to the latter status before the US and Israel attacked Iran on February 28. Stagnation – high prices with low economic growth. Some on Wall Street are pointing to the stagflation period of the 1970s as a cautionary tale. Then, the S&P 500 fell more than 40% in a year as the OPEC oil crisis coincided with a recession. These concerns dampened expectations for further interest rate cuts from the Federal Reserve this year. In fact, the market no longer favors a 25-basis-point cut in September, according to Friday’s CME FedWatch tool. Cybersecurity CrowdStrike was the top performer in the portfolio, gaining 3% for the week. We found even more reason to support a cybersecurity stock as the Iran war increased the likelihood of attacks on digital systems. “The ramp up in cyber terrorism is unusual, according to CrowdStrike CEO George Kurtz,” Jim said at the Thursday morning meeting. In a text message to Jim, Kurtz said, “You’ll see more companies being targeted related to the conflict in Iran. And, as the smoke screen of war goes on, China is ramping up their activities. They’re very interested in what’s going on in the war.” Kurtz’s remarks came a day after medtech firm Stryker reported an Iran-related cyberattack. The club released an analysis outlining three reasons to buy CrowdStrike during the Iran War. We have a Buy-equivalent rating of 1 on the stock and a $500 price target. We also have peer Palo Alto networks. We have a price target of $200 and a rating of 3, meaning we strongly sell Palo Alto. Jim still thinks highly of Palo Alto, but wants to consolidate the portfolio’s cyber exposure around just one name — and that name is CrowdStrike. (See here for a complete list of stocks in Jim Cramer’s charitable trust.) Subscribe to the CNBC Investing Club with Jim Cramer and you’ll receive a trade alert before Jim trades. Jim waits 45 minutes after sending a trade alert before buying or selling stock in his charitable trust’s 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 above Investment Club information is subject to our terms and conditions and privacy policy, including our disclaimer. No fiduciary obligation or duty shall exist, or be created, by your receipt of any information provided in connection with Investing Club. No specific result or profit is guaranteed.
