Jim Cramer says these 3 stock market themes could work if the oil shock eases

CNBC’s Jim Cramer warns against ignoring the Iran war on the grounds that rising oil prices could eventually stifle even the best stock ideas.

“No matter what we do, war cannot be ring-fenced. I don’t want to sugarcoat this. We can’t avoid this problem,” Cramer said on “Mad Money” Wednesday night. “People try to ignore the impact of the war, or they try to see through the war, to see past it until it’s over.”

This may be why the market did not experience further declines on Wednesday. S&P 500 It closed with a slight decrease in the session where US oil prices increased by 5%. This is a far cry from Monday’s rally to $119 per barrel. But current West Texas intermediate Crude oil levels above $88 per barrel are still up more than 50% to date.

Investors appear to be counting on the release of global strategic oil reserves to support the stock market until the conflict ends. President Donald Trump said Wednesday evening that he would tap the U.S. Strategic Petroleum Reserve to help cushion energy prices. Earlier in the day, the International Energy Agency decided to release 400 million barrels of oil to address the global supply disruption.

While these moves are positive, they are just a Band-Aid.

“Without any reason to believe the war is over, there is nothing to prevent oil from eventually rising to $120 and above,” Cramer said. “This would break any hedges. All bullish bets would be void.”

A return to these levels or worse could trigger widespread selling across stocks, “the sell-off in S&P futures being so ugly that Exxon And Strip “They too will be crushed just because they are part of the index.”

Still, Cramer outlined several themes investors could consider if oil stabilizes and tensions ease around the Strait of Hormuz, a critical waterway through which much of the world’s oil supply passes.

• The first theme is AI-driven data center infrastructure. Cramer noted strong results Seer as confirmation of the trend. “We got the best validation of the power of the theme when data center champion Oracle reported amazing numbers showing that its build was going better than anyone thought,” he said.

• The second is the ongoing shortage of memory used in artificial intelligence and computing systems. Cramer said: Hewlett Packard Enterprise suggests that tight supply may last longer than investors expect.

• The third issue Cramer highlights is discount retailers who benefit when consumers trade up during periods of inflation. “The important thing is for families who are struggling financially to move down. Burlington, Ross StoresAnd T.J.X. “Along with HomeGoods, Marshalls and TJ Maxx sections,” he said.

With geopolitical uncertainty still looming, Cramer concluded that these themes were “the only ones I know of that can be bought after the oil run that devastated the stock market.”