Why Jim Cramer is reluctant to buy Tuesday's sell-off — and good news on Starbucks' turnaround

U.S. markets experienced a significant downturn on Tuesday, with the Dow falling over 500 points and the S&P 500 down more than 1%, driven by a federal appeals court ruling against some Trump-era tariffs and rising Treasury yields, compounded by typical September weakness. Salesforce shares declined ahead of earnings, despite Morgan Stanley noting stable channel checks and potential 2026 revenue acceleration from its new AI offering, Agentforce, alongside CEO comments on AI-driven headcount reductions. Conversely, Starbucks demonstrated strong turnaround progress, reporting a record sales week in U.S. company-operated stores following its fall product launch, indicating operational improvements.

Analysis

U.S. equity markets began September with a significant downturn, as the Dow Jones Industrial Average fell over 500 points and the S&P 500 declined more than 1%. The sell-off is attributed to a combination of factors, including a federal court ruling that deemed certain Trump-era tariffs illegal, rising Treasury yields, and historical September seasonality. Amid this broad market weakness, Salesforce (CRM) shares traded lower ahead of its earnings report. While Morgan Stanley's channel checks were described as stable yet "slightly uninspiring," the firm raised its price target by $1 to $405, citing long-term potential for revenue acceleration in 2026 driven by its new AI offering, Agentforce. The company's use of AI to reduce headcount in its customer support unit by thousands was noted as a cost-saving measure, though investor focus remains on top-line growth. In a contrasting development, Starbucks (SBUX) is showing strong signs of a successful turnaround, having achieved a record-breaking sales week in its U.S. company-operated stores following its fall product launch. This suggests that strategic initiatives to improve customer throughput, while potentially pressuring gross margins, are effectively driving top-line performance.

Key Decisions for Investors

• Given the broad market sell-off and stated reluctance to buy the dip, investors should exercise caution and monitor the upcoming jobs report for signs of economic stability before increasing market exposure.
• For Salesforce, the key is to weigh the near-term uncertainty from uninspiring channel checks against the long-term growth narrative of its AI products; the upcoming earnings call will be critical for assessing execution.
• The record sales week at Starbucks provides a strong bullish data point for its turnaround strategy, suggesting that investors should be wary of selling the stock as operational changes appear to be successfully driving consumer demand.