CNBC’s Jim Cramer analyzed Tuesday’s market moves and said investors were concerned about the impact rising bond yields would have on the broader economy, with some big tech stocks rising while others explained the reason why the stock was in decline.
“The big resurgence of big tech companies today is because of the bond market and has nothing to do with stocks themselves,” he said. “So even if you still need to own a portion of the Magnificent Seven for diversification, keep in mind that Rally’s hiatus is temporary.”
The Dow Jones Industrial Average fell for the second day in a row on Tuesday, marking the index’s first consecutive decline since September. The S&P 500 also closed lower, but the tech-heavy Nasdaq Composite Index rebounded, ending the day up 0.18%.
Rising bond yields are pushing traders away from cyclical stocks, which have led the market for much of this year and are less dependent on the Federal Reserve’s interest rate cycle, Cramer said. It is said that they are returning to the brand. He said some recent earnings reports have disappointed investors, but that’s consistent with a “rather benign period” where employment remains strong even as the Fed continues to cut interest rates. He added that this was because it didn’t appear to be the case. He named weaker companies: GE Aerospace, Kimberly-Clark, Nucor, Genuine Parts and Pulto Group. Meanwhile, stocks of Amazon, Meta, Alphabet, and Microsoft rose.
But Cramer said some companies are fundamentally strong and scolded negative views on some stocks that suffered losses. He said stocks remain strong after days like Tuesday, when managers were “scared about the economic cycle, nervous about aerospace, frightened by home builders, stunned by auto parts and chilled by Kleenex sales.” He said there is a possibility that it will rise again.
“We’ve seen this movie before. It’s been going on for over 10 years,” Kramer said. “Don’t worry, the money will quickly spin back into place.”
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