What we make of Trump's Vietnam trade deal — plus, how to think about Apple's rally

CNBC

2 days ago

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. Market moves: The S & P 500 was nicely higher on Wednesday, with the broad market index on pace for another record close. The session follows Tuesday's vicious rotation out of momentum-based, year-to-date winners into more value-oriented laggards. The rotation looks mostly short-lived, although we are seeing some continued strength in some selected, unloved value stocks within our portfolio such as DuPont , Danaher , and Dover . Technology was back rallying, with chip stocks like Club names Nvidia and Broadcom up solidly. Both were just a few dollars shy of their record-high closes on Monday. Banking on it : We also love a market rally driven by the bank stocks, and we're getting that Wednesday. Many of them, including Wells Fargo and Goldman Sachs , were higher after increased capital return announcements to shareholders. Those Club names hit all-time intraday highs. Capital One , which did not raise its capital return plan but has the means to later this year, also logged an all-time high Wednesday. Capital One, also in our portfolio, is poised to extend its winning streak to 10 straight sessions. It's been enjoying a rally as Wall Street realizes what we have been saying all along about the power of the credit card giant's acquisition of Discover in mid-May. Vietnam deal: President Donald Trump announced on Truth Social that the United States has reached a trade deal with Vietnam. The retail and apparel industries are most impacted by this news since the country is the second largest supplier of footwear, apparel, and accessories sold into the United States. Trump announced that the tariff on Vietnamese imports into the U.S. will be lowered to 20%, down from the 46% duty announced on "Liberation Day," and then paused a week later. While that appears to be a positive development, the new rate is still higher than the 10% "reciprocal" tariff granted to most countries— excluding China — for 90 days during trade negotiations. Additionally, the U.S. will impose a 40% tariff on transshipped goods — items originally produced elsewhere but routed through Vietnam to bypass higher duties. Vietnam has been viewed as a key transshipment point for Chinese exporters. In exchange, Trump said Vietnam has agreed to eliminate all tariffs on U.S. imports. Net-net, we welcome the certainty it brings to the markets and more trade deals in the future that could bring the same. Apple traction: Shares of the iPhone maker were on the verge of a four-session winning streak — putting the stock at its highest level since mid-May. Two reasons are driving this rebound. The first is that as the new month/quarter/half of the year turned, there has been a rotation out of first-half winners/momentum-driven stocks and into more "value" based stocks that have lagged. We mentioned that dynamic in the market section. Apple had a disappointing first half of the year and was the third worst performer in the portfolio. The second reason — and one that could have more lasting impact if executed well — is growing speculation that Apple may pivot and partner with an AI-native platform like OpenAI to accelerate its own AI initiatives. Based on recent reporting, it appears Apple has finally acknowledged that it's lagging in the AI race and is now making a serious push to enhance its capabilities. That begs the question: Is now the right time to get on board? Not so fast. The idea that Apple might break from tradition and partner with companies like Perplexity, OpenAI, or Anthropic to bring its AI offerings more in line with peers has certainly caught investors' attention. And, it should. Bringing in a real AI partner will materially boost Apple Intelligence, which is the key to unlocking more iPhone sales. But it's tough to get too excited without something more concrete, especially with earnings season just around the corner. As we said in the Morning Meeting, Apple has lost 18% year to date. We don't see a pressing need to sell any more shares down here. However, we're reluctant to chase the stock and upgrade our rating, as buying here means betting on the hope that Apple will strike an AI deal soon. There's still no certainty around if or even when that would/could happen. The move over the past week is a preview of how the stock will trade if it announces a meaningful AI deal, but we're keeping the position as a hold-equivalent 2 rating until we have more information. Up next: There are no major earnings reports on Wednesday after the closing bell or before Thursday's opening bell. The big event in Thursday's holiday-shortened trading session is the government's nonfarm payroll report for June. As we've said before, the jobs report has the power to set the tone for trading in the new month. The consensus estimate for job gains is 115,000, with an unemployment rate ticking to 4.3%. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. 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