Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch—an actionable afternoon update timed for the final hour of trading on Wall Street. On Thursday, stocks declined sharply, with the Dow Jones Industrial Average, S&P 500, and Nasdaq each falling over 1%. Earlier in the session, when markets appeared steadier, we mentioned during the Morning Meeting our intention to take some profits and raise cash as the market seemed overbought. Shortly after our program, the market dropped significantly, but we successfully locked in gains on Eaton and Procter & Gamble, both posting double-digit percentage increases this year. The market's sharp downturn reflects widespread concern about AI disruption across various sectors, including software, financials, office real estate, and trucking and logistics. As AI models rapidly improve, investors prefer to preemptively sell stocks potentially vulnerable to these risks rather than wait to assess the real impact. One tech stock bucking the trend was Alphabet, which rose slightly following its announcement of a major upgrade to its Gemini 3 Deep Think reasoning model. Google stated this new version can now address complex scientific, research, and engineering challenges, reinforcing Alphabet’s leadership in the AI frontier. We made a small purchase of Alphabet shares on Tuesday and remain interested in buying more if the stock weakens, as suggested earlier Thursday. In housing, January existing home sales dropped 8. 4% month-over-month to a seasonally adjusted rate of 3. 91 million, according to the National Association of Realtors (NAR), marking a 4. 4% decline from January 2025. By comparison, December sales rose 5. 1% from the prior month to 4. 35 million and were up 1. 4% annually. Although these figures might seem discouraging for housing market recovery and stocks like Home Depot, we’re cautious about drawing conclusions.

The seasonal adjustments do not account for extreme weather, and January was unusually cold east of the Rockies, which NAR Chief Economist Lawrence Yun noted makes it difficult to interpret whether the decline is a temporary anomaly. Furthermore, since the data reflects closed sales, the slight decrease in the 30-year fixed mortgage rate (from 6. 19% in December to about 6. 1% in January) is unlikely to influence this report. A sustained drop in mortgage rates would be needed to positively impact Home Depot’s prospects. We remain hopeful that President Donald Trump’s involvement in the mortgage market may have a beneficial effect, and the anticipated changes in Federal Reserve leadership—amid Trump’s pressure for rate cuts—could further push mortgage rates down. Having taken profits in Home Depot last week and downgraded it to a hold-equivalent rating of 2, this weak January data does not alter our stance on the stock. Looking ahead, earnings reports after Thursday’s closing bell will include Coinbase, Arista Networks, Toast, Expedia, Dutch Bros, DraftKings, Applied Materials, and Pinterest. Before markets open Friday, Moderna, Advance Auto Parts, and Enbridge will release results. Additionally, the January Consumer Price Index (CPI) report is due Friday. (A full list of stocks in Jim Cramer’s Charitable Trust is available. ) Subscribers to the CNBC Investing Club with Jim Cramer receive trade alerts before Jim makes moves. He waits 45 minutes after issuing a trade alert before buying or selling stocks in his charitable trust portfolio, and 72 hours if the stock has been discussed on CNBC TV. Please note, all Investing Club content is subject to terms, conditions, privacy policy, and disclaimers. No fiduciary duty is established through this information, and no specific profit or outcome is guaranteed.