Why stocks moved off their worst levels — plus, a step forward in Honeywell's split

CNBC Finance

4 min read

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch â an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks were lower but well off Tuesday's worst levels as the market grappled with a constant stream of headlines about the Iran war and a continued spike in oil prices due to supply concerns. At their lows of the day, the S & P 500 and Nasdaq dropped 2.5% and 2.7%, respectively. In late afternoon trading, they were each down roughly 1%. Helping out stocks, oil dropped from its highs of the day after Politico reported that the U.S. is considering military aid to help ships get through the Strait, alleviating the potential bottleneck. This sent a signal to the markets that the Trump administration is aware of the surging oil prices, which can have an inflationary impact on the broader economy. The administration later confirmed that the Navy would provide escorts, if necessary. The steep stock declines early Tuesday may have taken some investors by surprise since stocks on Monday reversed their losses for a slight gain on the session. It remains to be seen if the market can stage another Monday-like comeback, but the wipe-out of a bulk of Tuesday's losses is a great start. As the Iran war and the surge in oil prices command the market's attention, it's important not to lose sight of the business developments unfolding at individual companies. Take, for instance, Honeywell , which announced Tuesday morning the filing of its Form 10 registration for its planned spin-off of Honeywell Aerospace. This represents an important milestone toward the launch of the aerospace company, which will trade under the ticker "HONA" after it becomes independent in the third quarter. Honeywell Aerospace also announced it will host an Investor Day on June 3 to showcase the business and help investors better understand its organic growth profile and strategic priorities. As we get closer to the breakup date, we expect Honeywell shares to converge toward their higher sum of the parts valuation, which an analyst at Wolfe Research pegged last week at $293. This is one analyst's view, but this high valuation reflects a 21 times multiple on the Aerospace business, a 20 times multiple on Automation, which will be the RemainCo Honeywell, and a 10 times multiple for the Productivity Solutions & Services and Warehouse & Workflow Solutions businesses that it is trying to sell . Despite the recent market swings, Honeywell shares were only a few dollars off their record high close of $248 on March 2. CrowdStrike reports earnings after Tuesday's close. It's a chance for CEO George Kurtz to explain to Wall Street why cybersecurity stocks should not be lumped in with traditional software-as-a-service (SaaS) names, which have been getting crushed recently on AI disruption fears. With the Iran conflict, cyber protection may be more important than ever . On Wednesday morning, Abercrombie & Fitch, Bath & Body Works, and Brown-Forman deliver their quarterly results. On the data side, Wednesday brings the February ADP employment report, S & P Global U.S. services PMI, and the ISM services index. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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Why stocks moved off their worst levels — plus, a step forward in Honeywell's split

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