Jim Cramer says to prepare for further stock declines but be open to opportunities

The stock market has capped off a rough week, and according to CNBC’s Jim Cramer, the pain is unlikely to end anytime soon.

With little on the calendar next week in terms of major company earnings or economic data, the inverse relationship between oil and stocks will become even more important. It is a well-known fact that when crude oil prices rise, stocks fall. This has been the case since the US and Israel first attacked Iran about three weeks ago.

Cramer said the war has taken on a “limitless nature” at a time when President Donald Trump has backed away from talk of ending military operations in the Middle East. reports Thousands of soldiers will be deployed to the region.

The market follows every development in the region. In Friday’s session, Dow Jones Industrial Average And Nasdaq It has dipped into correction territory, defined by a decline of at least 10% from recent highs. Both closed sharply lower but above that threshold. S&P 500Bitcoin, which also dropped on Friday, has performed slightly better recently; It is down 7% from its recent peaks. All three indicators recorded four consecutive weekly losses.

International oil benchmark Brent crude rose more than 3% to $112.19 per barrel on Friday, reaching its highest level since July 2022. It rose another 8.8% during the week.

“It’s pretty hard to figure out what to do with stocks, given how quickly oil can rebound. But you don’t want to throw away stocks of good companies for something that could theoretically result in a phone call,” Cramer said on “Mad Money” Friday night. he said. “But if the goal is to reopen the Strait of Hormuz, [that] It won’t be easy to do this. This will require either tremendous escalation or a diplomatic breakthrough. And I think the latter seems unlikely.”

“We have no idea what’s going to happen here. We know the war is bad for stocks. Its economic impact is global. Every positive seems to be met with two negatives, and all the positives keep us from being oversold enough to get a legitimate bounce,” Cramer said.

With this setup, Cramer turned his attention to next week’s corporate earnings.

• Home Pagea national construction company, will report earnings on Tuesday. Cramer said this should give investors an opportunity to read up on the beleaguered housing industry. With mortgage interest rates still high, he expects a “mild sales story” for the quarter. “Housing weakness is a key reason why I believe the Fed should keep rate cuts on the table despite inflation driven by higher energy costs,” Cramer said. “Not enough transactions are happening, and home sales could play a huge role in giving this economy the momentum it desperately needs right now.”

• Quarterly results from uniform supplier on Wednesday morning Cintas and payroll services firm paychex – Cramer described both as high-quality companies with underperforming stocks. Cintas’ shares should rebound after completing its acquisition UniFirsthe said. Paychex shares are under pressure ahead of earnings due to AI disruption concerns. “Tall people do shadow boxing in shorts in this [stock]”And I can’t say who will win,” he added.

• Carnival Earnings are on Friday. Underperforming, Cramer said Wall Street is showing more positive growth for cruise lines. “Stocks are down and those higher fuel costs aren’t helping them, but Carnival is considered a worthwhile holiday, something that seems pretty rare these days,” he added.

Cramer said an ultimately challenging market may also present an opportune time for selective buying as investors look ahead to the new week. “I will say that we are starting to get lower prices in some industries: banks, foods, pharmaceuticals, retailers, and in some cases, big tech companies. So as oil moves higher, you have a very good chance of buying high-quality stocks at reasonable prices.”