Cramer says Goldman has room to rise as Wells Fargo seeks new narrative

U.S. stocks advanced Wednesday after wholesale inflation unexpectedly fell 0.3% in June, giving investors a second softer price reading in two days. On CNBC’s Investing Club livestream, portfolio director Jeff Marks said the producer price data, together with Tuesday’s cooler consumer inflation report, made a Federal Reserve rate increase at its July meeting unlikely.

The producer price index decline was driven in part by lower gasoline prices, according to the CNBC discussion. Marks also flagged a market risk from energy: oil prices had been rising again amid U.S.-Iran airstrikes and after the U.S. reinstated a naval blockade of Iranian ports near the Strait of Hormuz, CNBC reported.

Goldman and Wells Fargo draw contrasting reactions

Jim Cramer said Goldman Sachs shares could continue to advance after the bank reported what he described as a strong quarter supported by investment banking activity. Goldman’s results benefited from underwriting and mergers and acquisitions work, areas that tend to improve when corporate clients issue securities or pursue deals.

Those businesses differ from traditional bank lending. Underwriting fees come from helping companies sell debt or equity to investors, while M&A advisory revenue is tied to transaction mandates. A stronger fee backdrop can offset pressure elsewhere in a bank’s earnings mix, though it remains sensitive to market conditions and executive confidence.

Wells Fargo shares rose 2% Wednesday, one day after the stock declined despite what CNBC described as a solid quarterly report. Cramer focused on Chief Executive Charlie Scharf’s effort to build Wells Fargo’s underwriting and mergers business and to reduce the market’s reliance on net interest income as the bank’s defining metric.

Net interest income, the difference between what a bank earns on loans and securities and what it pays on deposits and funding, was slightly below expectations in the second quarter, according to CNBC. Cramer questioned whether Scharf can persuade investors to value Wells Fargo on a broader earnings base. For now, Cramer characterized the stock as a hold at less than 12 times forward earnings.

Apple rebounds after downgrade

Apple shares climbed 3% and traded above Monday’s record closing price of $317. Cramer said Apple had absorbed elevated memory costs for several quarters rather than passing them through fully to customers, while still producing strong margins.

Cramer said Apple could post what he called “a monster quarter” if demand remains firm despite recent price increases for Macs and iPads and anticipated iPhone price rises. KeyBanc downgraded Apple to sell on Tuesday, citing concern that higher prices could weigh on demand. Cramer rejected that view on the livestream, saying, “I like Apple here.”

The CNBC Investing Club also discussed Morgan Stanley, BlackRock, IBM, Conagra and PayPal during a rapid-fire segment. Cramer’s Charitable Trust held Apple, Wells Fargo and Goldman Sachs, according to CNBC. The club said subscribers receive alerts before Cramer trades and that he waits 45 minutes after an alert before trading for the trust, or 72 hours if he has discussed the stock on CNBC television.

This story draws on original reporting from CNBC.