Cramer says Goldman can climb as Wells Fargo tries to shift the story

Jim Cramer told CNBC Investing Club members Wednesday that Goldman Sachs still has room to run after a strong quarter powered by investment banking. For retail investors watching bank stocks, the read-through is straightforward: Wall Street dealmaking is helping some lenders more than traditional banking metrics are helping others.

Cramer said Goldman delivered a “great quarter” on strength in investment banking, according to CNBC’s recap of the club’s Morning Meeting. Investment banking includes work such as advising on mergers and acquisitions, known as M&A, and helping companies raise money through underwriting, which means arranging the sale of stocks or bonds.

His view on Goldman was upbeat. Cramer said the stock “can keep going higher,” CNBC reported. Jim Cramer’s Charitable Trust is long Goldman Sachs, CNBC said.

Wells Fargo faces a narrative test

Wells Fargo shares rose 2% Wednesday, a day after the stock fell despite what CNBC described as a solid quarterly report. Cramer focused on the bank’s attempt to put more weight on underwriting and M&A as CEO Charlie Scharf played down net interest income as the main scorecard for the company.

Net interest income, or NII, is the money a bank earns from loans and securities after subtracting what it pays depositors and other funding sources. It is a core measure for consumer and commercial banks because higher rates can lift loan income, while deposit costs can squeeze profits.

CNBC said Wells Fargo’s second-quarter NII came in slightly light. Cramer questioned whether Scharf can get investors to change how they judge the bank. For now, he described Wells Fargo as a hold at under 12 times forward earnings, CNBC reported. Forward earnings are expected profits over a future period, often based on analyst estimates. Cramer’s charitable trust is long Wells Fargo, according to CNBC.

Inflation data helped the broader market

The bank discussion came during a stronger day for stocks. CNBC said equities rose Wednesday after investors received a second encouraging inflation report in two days.

The June producer price index, a measure of prices businesses receive for goods and services, unexpectedly fell 0.3% before the market opened, CNBC reported. The decline reflected a sharp drop in gasoline prices. That followed Tuesday’s cooler consumer price index, which also benefited from lower energy costs.

Jeff Marks, portfolio director for the CNBC Investing Club, said the two inflation reports remove the prospect of a Federal Reserve rate increase at the July meeting. Rate decisions matter for stocks because higher rates can pressure company valuations and borrowing costs, while lower or steady rates can ease those pressures.

CNBC also flagged a risk to that calmer inflation backdrop: oil prices had recently climbed as the U.S. and Iran exchanged airstrikes and after the U.S. reimposed a naval blockade of Iranian ports near the Strait of Hormuz.

Apple rebounds after a sell call

Apple also drew attention in the meeting. CNBC said the stock rose 3% and traded above its Monday record closing price of $317.

Cramer said Apple had absorbed high memory costs for several quarters instead of passing them on through higher device prices, while still producing strong margins. He said Apple could have a “monster quarter” if demand holds up after recent Mac and iPad price increases and expected iPhone price increases, according to CNBC.

KeyBanc downgraded Apple to sell Tuesday because of concerns that higher prices could hurt demand, CNBC reported. Cramer rejected that view and said, “I like Apple here.” Cramer’s charitable trust is long Apple, according to CNBC.

CNBC said the rapid-fire portion of the meeting also covered Morgan Stanley, BlackRock, IBM, Conagra and PayPal.

This story draws on original reporting from CNBC.