Stocks jump despite shutdown; we bought more of our newest stocks

Day three of the federal government shutdown came and went Friday, with no end in sight. The stock market saw more all-time highs before the rally ran out of steam. The S & P 500 on Friday eked out a fractional gain for its 29th record-high close since the market’s tariff lows in early April. The Nasdaq fell modestly Friday. The record close on Thursday was the Nasdaq’s 30th since early April. They both logged four positive weeks out of the past five, getting the new month off to a solid start after strong September and third-quarter performances. Jim Cramer said on Tuesday, hours before federal funding ran out, that a government shutdown is a non-event. “I don’t want anyone to sweat it,” he added. The market came to the same conclusion. .SPX YTD mountain S & P 500 (SPX) year-to-date performance The best portfolio stocks for the week were health-related: Shares of life sciences firm Danaher surged more than 16% and drugmaker Eli Lilly jumped nearly 16%. The relief rally in this recently struggling sector came after President Donald Trump’s deal to exempt Pfizer from pharmaceutical tariffs in exchange for the company’s commitment to sell drugs for less and invest more to bring manufacturing back to the United States. Healthcare was the strongest for the week among the S & P 500’s 11 sectors. Utilities and information technology were No. 2 and No. 3 this week as the artificial intelligence trade continued to work. Utilities got a boost because of the power needed to run AI data centers. Tech jumped as Club stock Nvidia soared to record highs Thursday. It was modestly lower Friday. Utilities also rose as power provider AES surged on a report that BlackRock’s Global Infrastructure Partners was in talks to buy it for $38 billion. GIP, the infrastructure fund manager that BlackRock acquired last year, was also said to be in talks to purchase Aligned Data Centers for around $40 billion. Shares of BlackRock ended flat Friday and just under Tuesday’s record-high close. NKE YTD mountain Nike YTD Nike stock advanced after posting quarterly earnings Tuesday evening that far exceeded Wall Street’s expectations. The results showed investors that CEO Elliott Hill’s turnaround strategy has made progress. Nike previously forecasted that revenue would fall by mid-single-digits on a percentage basis this quarter —but instead, revenue increased by 1%. “Turnarounds require management credibility, and the best way to create that is by beating the guidance you give the Street,” Jeff Marks, director of portfolio analysis for the Club, wrote in his earnings analysis. “Nike’s results were far better than the guidance that executives offered three months ago.” Management’s efforts to fix Nike’s structural issues are a key reason why the Club initiated its position last week. On Wednesday, we bought more shares after the earnings report highlighted further signs of improvement. We started a Nike position on Sept. 26. BMY YTD mountain Bristol Myers Squibb YTD On Wednesday, we also took some Bristol Myers Squibb off the table to raise cash for better opportunities down the line. Shares jumped earlier this week amid the aforementioned relief rally in large-cap drug names on the Trump-Pfizer agreement. While we trimmed into strength, the Club took a loss of roughly 20% on Bristol Myers stock purchased in November 2024. Our long-term view on Bristol Myers depends on a key trial for its schizophrenia drug Cobenfy, which has suffered some setbacks as of late. BA YTD mountain Boeing YTD On Tuesday, we were buyers of Boeing after the stock surprisingly gave up a lot of its gains that were connected to news of easing restrictions from the Federal Aviation Administration last week. We saw the Sept. 26 announcement from the FAA as a win because it allows Boeing to more easily increase production. If Boeing can deliver more planes, its free cash flow should improve. In fact, Bloomberg reported Friday that Boeing’s new 777X widebody jet is now set to make its commercial debut in early 2027 instead of next year. During Friday’s Morning Meeting, Jeff pointed out that CEO Kelly Ortberg said at a conference last month that the 777X program was behind schedule, and the company was working through the financial impact. While far from positive, it was not new information. COST YTD mountain Costco YTD The Club made only a small purchase of additional Costco shares on Tuesday. It’s a high-quality company whose stock has been in a rough patch. The pullback presented an opportunity, given Costco’s consistent market share gains and durable growth story. While Costco’s quarterly earnings failed to impress us last week, we were glad to see membership growth and gross margin expansion. Wall Street analysts also made big calls on some of our stocks this week —…