CNBC’s Jim Cramer warned that market players have two ways to approach high-growth stocks that wobbled and wobbled during a volatile session on Wall Street on Tuesday.
Investors may choose to join the sell-off that has pushed some tech names like Apple into negative business territory this year.
The other option, following the example of Federal Reserve Chairman Jerome Powell’s reiterated commitment to keep interest rates low, is to wait and consider loading valuable stocks discounted from their highs, Cramer said after the market closed. mixed.
“After today’s afternoon rally, it is not too late to sell the most expensive stocks if you want,” said the “Mad Money” host. “But as for the best-growing stocks, more than 10% below their highs, call me a buyer. Not all at once, not big, but a buyer on any retest of that 9:47 am low. we saw today. “
Cramer’s assessment of the current state of the market follows a roller coaster trading day where the major US averages rebounded from their session lows. The market took a sharp sell-off in the morning, with the Nasdaq Composite falling nearly 4% to its low, before the Dow Jones and the benchmark S&P 500 managed to make modest gains at the close.
The Dow advanced more than 15 points to 31,537.35 for a gain of 0.05%. The S&P 500 finished 0.13% higher at 3,881.37 to end its losing streak in five. The high-tech Nasdaq couldn’t muster enough for a positive day, falling 0.5% to 13,465.20, extending Monday’s losses.
“I’m happy to think of the idea that you need to ring the record here, but I happen to like growth stocks on a fear of reflation. I like growth stocks when risk is on. I like growth stocks. when risk is off, “Cramer said.
“If you want to keep the growth stocks … you have to be prepared to take a bit of pain, like late 2015 and early 2016, that was the last great time to buy these stocks, or you can just sell something if you want to try switching back to a lower level, “he added.
The market has worked hard through a turnover as investors trade growth and technology stocks they outperformed throughout the pandemic for value stocks of companies that are expected to make a commercial return as the economy reopens. . The Nasdaq is now 4.5% from its closing high earlier this month.
Concerns that a revival in inflation could cause the Fed to raise interest rates, as it did twice in a three-month period between 2015 and 2016, pushed investors out of growth stocks in recent days. Cramer said. Higher rates pose a challenge to growth and utility stocks.
Stock prices in Apple, Salesforce and ServiceNow are down at least 3% this week.
However, during an appearance before Congress on Tuesday, Powell told lawmakers that inflation remains “soft,” that the labor market faces continuing challenges, and that the central bank was committed to its current monetary policy.
That reassured investors about interest rates, helping the market recoup some losses.
“This time our Fed chief has promised to postpone the rate hike, too many unemployed, but there will come a time and a point where these growth actions will be somewhat desperate,” Cramer said. “They will look like today … before people came to buy.”
Correction: This story has been updated to reflect the correct number of points the Dow advanced.
Disclosure Cramer’s charitable trust owns shares in Apple and Salesforce.