- CNBC’s Jim Cramer parsed Monday’s market action and explained why it can be beneficial to stay in the market, even if the future is unpredictable.
- “It’s better to stay in, stay on and let her ride than to try to pick the perfect moment to trade in and out and in and out of the stock market,” he said. “That’s not much of a strategy. It’s much more a game of chicken where there are no winners.”
CNBC’s Jim Cramer parsed Monday’s market action and explained why it can be beneficial to stay in the market, even if the future is unpredictable.
“It’s better to stay in, stay on and let her ride than to try to pick the perfect moment to trade in and out and in and out of the stock market,” he said. “That’s not much of a strategy. It’s much more a game of chicken where there are no winners.”
The indexes surged Monday after the U.S. and China agreed to temporarily pause most new tariffs the countries had issued on each other over the past few months. The Dow Jones Industrial Average jumped 2.8%, the S&P 500 surged 3.26% and the Nasdaq Composite climbing 4.35%. Wall Street has been in turmoil as President Donald Trump slapped harsh tariffs on most of the U.S.’s trading partners, especially China, where hundreds of major companies manufacture goods.
Cramer pointed out how quickly stocks rebounded after the announcement, and he said he’s rarely seen government action give Wall Street a positive surprise. For weeks, some investors had deemed a tariff-induced recession unavoidable, convinced Trump wouldn’t back down on punitive trade policy, he continued.
He observed that tech companies and those that clearly stood to take a hit from extreme duties on China — like Apple, Nvidia and Broadcom — saw huge gains. However, he noted that the rally was not confined to those with direct ties to China. Companies related more broadly to the health of the economy jumped, including names in the industrial, transport, consumer discretionary and financial sectors. This rally means that investors can focus on earnings without such a strong fear that a recession is imminent, he said.
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Meanwhile, “safety stocks” took a hit during the session, he added. He called those declines “a stark recognition that while the president may not be fixated on stocks, they’re always a focus, and he doesn’t want to annihilate the stock market.”
“Now, we know that we won’t be free of the bears here. There’s too much at stake. They don’t want to cede the rap that Trump could still cause world trade crash,” Cramer said, adding that some may advise taking advantage of this rally to short stocks.
“But I come back and say that we see how easily stocks can rally — isn’t it a little dangerous to be that short?”
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Apple, Nvidia and Broadcom.
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