Jim Cramer says the market’s rally is a peek into what stocks are worth buying
CNBC’s Jim Cramer said Wednesday’s massive rally as tensions between the U.S. and Iran eased revealed which stocks investors should buy and which they should avoid as conditions stabilize.
“When you go through the list of the best and worst performers, you can see what’s worth having and what’s untouchable when things calm down,” Cramer said on “Mad Money” Wednesday.
“When the market gets hit again, you know what professional money managers will be reaching for. It’s a great way to figure out what can take you higher and what’s just an old dead end,” he added.
Cramer’s comment came after stocks rose after President Donald Trump announced that the United States was suspending strikes against Iran for two weeks. The pause marks some easing in the five-week conflict that has seen Iran close the Strait of Hormuz, a critical waterway for global energy supplies. Of course, Cramer said questions still remain about the durability of the ceasefire and all the details that need to be worked out in a long-term agreement.
However, the Dow Jones Industrial Average rose 2.85%, while the S&P 500 rose 2.51% and the Nasdaq gained 2.8%. West Texas Intermediate crude fell 16% to $94.41 per barrel, while Brent crude oil for June delivery fell roughly 13% to $94.75 per barrel.
The Dow’s top gainers during Wednesday’s rally included: Sherwin-Williams, Caterpillar, Home Depot And Goldman SachsCramer pointed out.
“This is a pretty extraordinary group of leaders,” Cramer said. “When you see those four rising, that means investors believe interest rates are falling.”
The 10-year Treasury yield, which is tied to 30-year mortgage rates, also fell sharply on Wednesday. Cramer has previously said low rates are key to reviving the stagnant housing market and could support the broader economy while boosting stocks like Home Depot, which hit a two-year low on Tuesday.
Caterpillar, up 6.51%, is another name that shows “how amazing this market can be,” Cramer said. “It was a very challenging job because the company has more than one way to win.” This is explained by another company that benefits from low interest rates that make it cheaper to finance construction projects.
As for Goldman Sachs, Cramer cited several reasons to buy shares of the bank as market conditions improve. “There will be many agreements” [Trump] “Management is incredibly professional in dealing,” Cramer said. Goldman Sachs is due to report next week, and Cramer expects it to be good.
As for the losers of Wednesday’s aid rally, Cramer said it wasn’t surprising that oil companies were the way they were. Strip And diamondback make the list. Poor performance in stocks sales force And Working day Cramer said it shows investors haven’t forgotten the risks of AI disruption.
Other big decliners include plastic producers Dow Inc.But Cramer warned that supply disruptions in the Middle East won’t be resolved overnight.
“I’m not sure how easy it is to give those things up,” Cramer said.
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