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

Wall Street is poised for a higher open, with the S&P 500 at record highs, as market expectations for Federal Reserve rate cuts, now potentially three by year-end, solidify despite mixed inflation data and worsening jobless claims. In corporate news, Nvidia was upgraded to 'Buy' on strong AI compute demand and introduced a new inference chip, further solidifying its market lead, while Apple was downgraded to 'Neutral' due to an 'uninspired' iPhone lineup and delayed AI integration. UPS also saw a downgrade to 'Underperform/Sell' driven by regulatory changes impacting duty-free imports, raising dividend sustainability concerns, while Thermo Fisher and AutoZone received positive analyst revisions.

Analysis

The market is trading at record highs, fueled by mounting expectations for Federal Reserve easing, with mixed economic data reinforcing the case for accommodation. While the August consumer price index was hotter than anticipated, this was offset by a cooler wholesale inflation print and deteriorating weekly jobless claims, which have increased market odds for three total Fed rate cuts by year-end. In the technology sector, a significant divergence is apparent between key players. Nvidia (NVDA) received an upgrade to 'Buy' from DA Davidson, citing an optimistic outlook on AI compute demand that now supersedes previous concerns about competition and China. This bullish sentiment is further supported by the announcement of a new inference chip, the Rubin CPX, described as a "giant leap" that extends Nvidia's performance lead over AMD and custom chip providers. Conversely, DA Davidson downgraded Apple (AAPL) to 'Neutral', labeling the new iPhone lineup as "uninspired" and projecting that a necessary, significant AI infusion to drive a major refresh cycle is not a near-term catalyst. Elsewhere, United Parcel Service (UPS) was downgraded to 'Underperform' by Bank of America following the end of the de minimis exemption for duty-free packages, a regulatory change that raises substantial questions about the sustainability of its 7.8% dividend. Positive analyst actions include an upgrade for Thermo Fisher (TMO) to 'Overweight' with a price target increase to $550 on attractive valuation, and a price target hike for AutoZone (AZO) to $4,925 from UBS, which highlighted the company's strong positioning for market share gains and its history of aggressive stock repurchases.

Key Decisions for Investors

• Investors should recognize Nvidia's widening competitive moat, evidenced by a key analyst upgrade and the launch of its new Rubin CPX inference chip, which contrasts sharply with the near-term product and AI integration challenges cited in Apple's downgrade.
• It is prudent to reassess exposure to UPS, as the downgrade to 'Underperform' and the end of the de minimis exemption pose a direct threat to earnings and call into question the sustainability of its 7.8% dividend yield.
• Given that deteriorating labor data is increasing the odds of multiple Fed rate cuts, investors could consider companies with strong capital return programs and clear market share growth drivers, such as AutoZone, which received a significant price target increase and was noted for repurchasing approximately half its stock over the past decade.
• Consider the 'leaning more positive' stance on Robinhood, where a rapid pace of product innovation is seen as a potential catalyst for multi-year user and earnings growth, even as the stock retains a 'Hold' rating from Morgan Stanley.