Oil shock is driving sell-off, tech won’t bottom until it ends
CNBC’s Jim Cramer outlined his game plan for next week, warning that the relentless rise in oil due to the Iran war continues to put pressure on stocks and could signal further declines.
“Another terrible week. It’s been four weeks since the war started and it’s been pretty terrible,” Cramer said on “Mad Money” on Friday. “The history of oil shocks is full of bear markets, 20% declines that call for a cash hike.”
Stocks finished lower on Friday, led by the Nasdaq falling 2.15%, the Dow Jones Industrial Average dropping 1.73% and the S&P 500 falling 1.67%, its fifth straight weekly decline.
Because conflict is hard to predict, Cramer said one trade consistently works out well. “The only thing that’s consistently right right now is to buy oil stocks. Whenever they’re down. Whenever they’re up. It doesn’t matter because crude is going higher.”
This dynamic has triggered a rotation in technology stocks. “They’re all bad now, including those once loved, now unloved Nvidia” and added that investors now “don’t care about soda stocks, they don’t care about drug stocks, and I have to say they like oil drillers. Technology, nothing.”
Here’s what Cramer will be watching next week:
Monday
Markets will likely remain tuned to developments in the Iran war. With the Strait of Hormuz, a critical oil transit route, still restricted and tensions between the US and Iran still high, oil is likely to rise and therefore stocks to fall.
Tuesday
McCormick and Company Reports involving a potential catalyst tied to acquisition talks Unilever‘s food brands. “I like that combination. I hope it works,” Cramer said. after closing Nike reports. “There’s no scope for Nike to return to greatness,” he said, citing competition and inventory issues as well as challenges in the Chinese market. Investors will also receive the monthly JOLTS (Job Opening and Labor Turnover Survey) report from the Bureau of Labor Statistics.
Wednesday
Conagra Brands will report earnings and provide a read on the under-pressured packaged foods group. The report comes alongside retail sales that will provide a pulse on the health of consumer spending. Weaker economic data may be needed for the Fed to justify lowering interest rates, Cramer said.
Thursday
Results from commercial lighting company Acuity Brands It will give you an idea about the construction. Cramer said the stock is down 25% since the beginning of the year due to a slowdown in the housing and construction sectors, where there is currently “little hope of accelerating.”
Friday
The jobs report comes on Good Friday, when markets are closed. Softer data could help support the case for lower rates, Cramer said. Yet sentiment remains strongly negative. “We are just as pessimistic about stocks now as we were when the Covid pandemic hit us,” he said.
As a result, Cramer said, “These declines aren’t just about technology. It’s about what you get with both inflation and higher interest rates.” Cramer says it’s unlikely the market pressure will ease until oil drops and the war is over.
