How Walmart's gas price warning shapes our retail outlook — plus, Honeywell's quantum connection

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. The S & P 500 shook off earlier losses Thursday and traded modestly higher in afternoon trading. The comeback coincides with oil prices moving well off their session highs, with U.S. benchmark WTI crude back below $100 per barrel. Earlier in the day, oil was advancing, bringing interest rates higher, after Reuters reported Iran's supreme leader ordered Iran's enriched uranium to stay in the country. Another headline adding to uncertainty around a potential peace deal was a Bloomberg News report that Iran is discussing with Oman the creation of a permanent toll system in the Strait of Hormuz, the vital oil waterway. Walmart shares fell sharply Thursday after the retailer reported in-line earnings and warned that consumers are starting to feel pressure from high fuel prices. As the largest grocer and retailer in the U.S. by revenue, Walmart has unique insights into the health of the consumer, so it's important to pay attention to what management is saying. And right now, the divide is growing between income classes. "We see with our customers that the high-income customer is spending with confidence into many categories," CFO John David Rainey explained on the earnings call, "while the lower-income consumer is more budget-conscious and perhaps navigating financial distress." One of Rainey's examples: The number of gallons that customers fill up with when they come to Walmart's fuel stations has fell below 10 for the first time since 2022. What this means is that customers are feeling stress at the pump and pulling back before filling up all the way because the cost is already stretching their budgets. Compare this to the story we heard Thursday morning from the luxury fashion brand Ralph Lauren, who reported a strong quarter, with sales up 17% year over year, sending its stock up over 14%. How this all relates to our investing framework is that we want to stick with companies who offer value. In good times or bad, a consumer always wants to get a great deal on quality goods. That means TJX Companies, which reported great earnings on Wednesday, Costco, which reports next week, and Amazon should continue to gain share in this environment. It also may mean Nike will have an even tougher time pulling off its turnaround, but that's a stock we're simply holding and not planning to buy more of until there's evidence it can return to earnings growth and restore margins. Rounding out our retail names, Home Depot is a special situation. Its business is tied to the home improvement cycle, which needs lower mortgage rates to spur home sales. The rebound in the housing cycle has been elusive, and we're patiently waiting to buy back what we sold much higher earlier this year until there's a clearer path to lower interest rates. The recent energy price spike tied to the Iran war has complicated that picture because it's rekindled inflation. Quantum stocks soared Thursday after The Wall Street Journal reported the Trump administration will give $2 billion in grants and take equity stakes companies operating in the nascent industry. The package furthers the government's plans to boost the quantum computing space, which has seen an influx of investments. Among the biggest beneficiaries of the grants are IBM and chipmaker GlobalFoundries, whose stocks were up about 8% and 11%, respectively. Another company involved was Quantinuum, which announced a letter of intent with the Commerce Department to receive federal funding. That's good news for Club name Honeywell, which holds a majority stake in Quantinuum. More funding could improve Quantinuum's balance sheet ahead of its planned initial public offering. The IPO could raise more than $1.5 billion and value Quantinuum at $15 billion to $20 billion, according to prior reporting by Bloomberg. Honeywell would be a beneficiary of a successful IPO, but only on an incremental basis. Shares of Honeywell rose nearly 3% on the news, a welcomed move for shareholders but one Jim Cramer cautioned may be too much. The roughly $3.5 billion of market capitalization Honeywell added Wednesday was a sizeable move relative to a few other quantum pure plays such as D-Wave, Rigetti, and Infleqtion. Jim said if put on his "trading hat" at his old hedge fund he would have trimmed some Honeywell on the rally. But we are not traders. We're long-term investors who don't want to flip in and out of the position ahead of the late June separation of its crown jewel aerospace unit. After the closing bell, we'll hear from Deckers, Take-Two, Workday, Zoom, Copart, and Ross Stores. BJ's Wholesale reports before the opening bell on Friday. On the data side, we'll see the final reading of the University of Michigan's May consumer sentiment and one-year inflation expectations survey. (See here for a full list of the stocks in Jim Cramer's Charitab