‘The wrong stocks are going higher’

CNBC’s Jim Cramer analyzed Wednesday’s session and expressed concern about the sectors driving the market’s rise, saying “the wrong stocks are going up.”

“This was a market where the winners were consumer packaged goods stocks and oils, the worst leadership groups possible,” he said. “Good consumer-bundled plays are recession stocks, oils are zero-sum – that’s the relationship they have with the rest of the economy.”

Cramer said that in a good market, companies should recover broadly, led by growth stocks, while cyclical names should stay “on the backburner” by moving higher. He said the progress of the transportation sector is positive because these stocks can represent the health of the economy. But most of all, Cramer said he wants to see banks recover. He explained that when banks are doing well, businesses are expanding, companies are going public, merger activity is strong, and individuals are perhaps taking out loans to buy homes.

But Cramer said Wednesday that bank stocks fell even as many reported good quarters. He suggested that Wall Street was cautious because of President Donald Trump’s threat to cap credit card interest rates at 10 percent. Cramer added that many investors believe such a cap could crash the entire economy because many people would not qualify for credit cards. He added that the cap could hurt not only banks but also the retail, travel and consumer discretionary sectors.

He said he didn’t think that cap would actually happen, but “it’s still a risk and not something shareholders want to worry about.”

Cramer noted that this market dynamic may not continue. But he advised that investors “should have some hedging measures” and should own stocks that can perform well in a weaker economy. Procter & Gamble.

“We have to hope that these two new leadership groups will not last long,” Cramer said. “I don’t think they will.”