Jim Cramer's top 10 things to watch in the stock market Friday

The S&P 500 opened higher after three consecutive down days, with core consumer inflation meeting expectations at 2.9% year-over-year and bond yields declining. President Trump announced new tariffs, including 100% on patented drugs and significant duties on heavy trucks, cabinets, and upholstered furniture, all effective next week. Concurrently, analysts raised price targets for Tesla to $600, citing autonomous technology, and for Microsoft to $625, driven by cloud and AI deals, while Home Depot was added to JPMorgan's analyst focus list. Boeing shares surged over 4% on reports the FAA will ease 737 MAX production restrictions, and Costco reported better-than-expected earnings despite a minor degradation in year-over-year sign-ups.

Analysis

The market opened with a positive bias, with the S&P 500 rising after three days of declines, supported by an in-line core consumer inflation reading of 2.9% year-over-year and a drop in bond yields. However, significant policy risk has been introduced with the announcement of new tariffs effective next week, including a 100% tariff on patented drugs, 25% on heavy trucks, 50% on cabinets, and 30% on upholstered furniture. On a company-specific level, several positive catalysts are driving sentiment. Boeing (BA) shares surged over 4% on reports the FAA is set to ease 737 MAX production restrictions, a key operational development. In the technology sector, analyst upgrades underscore strong fundamental outlooks: Microsoft's (MSFT) price target was raised to $625 by Morgan Stanley on the back of cloud and AI capacity constraints, while Tesla's (TSLA) target was lifted to $600 by Wedbush, reframing its valuation around robotics and autonomous technology rather than just auto manufacturing. Consumer demand signals are also strong for Apple (AAPL), as noted by a new store opening in Tokyo and a positive Evercore ISI survey. In retail, Home Depot (HD) was added to JPMorgan's analyst focus list, but Costco (COST), despite a better-than-expected quarter, is viewed as lacking a new catalyst for its high-multiple stock, compounded by a slight degradation in year-over-year member signups. Financials presented a mixed view, with Citi's price target increase on Morgan Stanley (MS) to $155 still landing below its recent closing price.

Key Decisions for Investors

• Investors should immediately assess portfolio exposure to sectors targeted by new tariffs, specifically imported heavy trucks, furniture, cabinets, and pharmaceuticals without US-based manufacturing, as these face imminent margin pressure.
• The prospective easing of FAA production restrictions on the Boeing 737 MAX represents a significant positive catalyst for BA, warranting consideration as a potential inflection point for the stock.
• Re-evaluate technology holdings based on evolving narratives; Microsoft's strength in cloud and AI and Tesla's pivot to autonomous technology are driving analyst re-ratings and may require a fresh look at their long-term valuation models.
• Be selective in the retail sector, as Home Depot is gaining analyst favor for long-term growth while Costco's high valuation and slowing member growth present a more cautious outlook despite strong recent earnings.
• Note the analyst sentiment on Morgan Stanley, where a price target increase that falls below the current market price suggests perceived limited near-term upside.