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

US July CPI data showed headline inflation at 2.7% annually, below expectations, though core CPI was slightly higher, leading to a positive market reaction. Concurrently, the US extended China tariff deadlines by 90 days, maintaining existing rates. In corporate news, Circle Internet Group reported robust Q2 revenue growth of 53% and a 90% increase in USDC circulation, while On Holding posted a 32% revenue surge and raised full-year guidance, both stocks experiencing significant appreciation. Separately, analyst upgrades were issued for Palo Alto Networks, Starbucks, and Chipotle, and Elon Musk threatened Apple with an antitrust lawsuit over App Store AI rankings.

Analysis

The market is digesting a mixed but slightly positive macroeconomic picture, with July's annual headline CPI at 2.7% coming in just below expectations, even as core CPI ticked slightly above consensus at 3.1%. Near-term inflationary concerns are further assuaged by the U.S. extending the China tariff deadline by 90 days, maintaining the status quo on trade levies. However, a rise in the NFIB's uncertainty index, despite higher small business optimism, introduces a note of caution. On the corporate front, strong execution is being rewarded handsomely. On Holding (ONON) surged nearly 17% after posting a 32% annual revenue increase, an improved gross profit margin of 61.5%, and raising its full-year guidance. Similarly, Circle Internet Group reported a 53% YoY revenue jump, propelled by 90% growth in its USDC stablecoin circulation. Analyst sentiment is providing tailwinds for several names, with upgrades and price target increases issued for Palo Alto Networks (PANW) to $225, Starbucks (SBUX) to $115, and Chipotle (CMG) following a 31% year-to-date sell-off. In the technology sector, the impact of AI remains a key theme of debate. While one prominent analyst thesis identifies Microsoft and Amazon as beneficiaries, Salesforce CEO Marc Benioff is actively refuting the notion. Concurrently, Apple (AAPL) faces a new legal headwind from Elon Musk, who is threatening an antitrust lawsuit over AI app rankings in the App Store.

Key Decisions for Investors

• Given On Holding's robust 32% revenue growth, expanding gross margin of 61.5%, and upgraded full-year guidance, investors should evaluate its potential for continued outperformance in the athletic apparel sector.
• The looming antitrust lawsuit threat from Elon Musk regarding Apple's App Store practices introduces a new legal and reputational risk, warranting close monitoring by AAPL shareholders for developments that could impact its services revenue.
• Investors should consider the recent analyst upgrades for Palo Alto Networks, Starbucks, and Chipotle, which may signal a turning point in sentiment, with PANW's upcoming earnings report on Monday serving as a critical near-term catalyst.
• The divergence in the AI narrative suggests investors should critically assess their software holdings, distinguishing between firms positioned as beneficiaries like Microsoft and Amazon, and those like Salesforce where the disruptive impact is being challenged.
• While the headline inflation reading and tariff delay provide a stable backdrop, the rise in the NFIB uncertainty index suggests it is prudent to monitor forward-looking economic indicators for signs of a shift in business sentiment.