Cybersecurity stocks surge thanks to IBM, and Nvidia climbs on more good China news

Breaking news from the markets: Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks are higher on Tuesday, with the S & P 500 recovering about half of Monday's losses. A much cooler-than-anticipated June consumer price index (CPI) report helped turn around the market futures, as traders backed off rate-hike expectations for the Federal Reserve's late July policy meeting.

But oil continued its rally, with U. oil benchmark WTI crude briefly topping $80 a barrel. The advance came even as President Donald Trump said the 20% reimbursement fee that he planned to impose on cargo shipments through the Strait of Hormuz will be replaced with investment deals with the Gulf states.

Economic Details

IBM's weaker-than-expected preliminary second-quarter earnings is a major market story, and the company's reasons for the shortfall is impacting several corners of Tuesday's market. IBM CEO Arvind Krishna said customer buying patterns were impacted by clients shifting spending toward tech hardware like servers, storage and memory ahead of indicated price increases. Krishna added that clients were "distracted" with cybersecurity concerns.

His comments reflect a new reality for enterprise IT budgets: More dollars are being allocated to cybersecurity defense, hardware, and, most likely, AI computing tokens as companies experiment on ways to improve efficiency and create new tools. This leaves less money to spend on software and other categories. What IBM said explains why cybersecurity stocks like Club names CrowdStrike and Palo Alto Networks are among the best performers in the S & P 500, along with Dell , Micron and others in the storage and memory food chain.

Healthcare is the worst-performing sector. HCA Healthcare is leading the group lower after the company announced preliminary second-quarter results and cut its full-year earnings per share outlook. The hospital operator said it experienced an increase in uninsured volumes from patients who lost coverage from health insurance exchanges.

Analyst Views

HCA's profit warning included weaker-than-expected surgical volumes in the second quarter, pressuring shares across the medical device sector. We'll see Wednesday whether Club name Johnson & Johnson's medical device business experienced a similar trend. Medical devices account for about 36% of the J & J's total revenue.

However, that share will shrink once the company completes the separation of its orthopaedics business. The separation was announced in October 2025 with a targeted timeline of 18 to 24 months. Shares of Club name Nvidia are up 4% on signs the company may have gotten its foot back in the door to China's AI market.

Jeffrey Kessler, the under secretary of commerce for industry and security, said Tuesday that a "trivial" number of Nvidia's H200 chips have shipped to China.

Financial markets are tracking the development closely as investors assess the likely impact.