The bond market dictates the trading of stocks


Tech stocks rose on Friday to end the week on a high note, but CNBC’s Jim Cramer expects more downside in the tech cohort as investors continue to rotate out of high-growth names.

“Like it or not, stocks are hip to the bond market right now,” said the “Mad Money” host.

As bond rates rise amid the first signs of an economic recovery, investors are fleeing riskier growth stocks to cyclicals, particularly bank and industrial stocks that have underperformed, he said. Cramer.

The high-tech Nasdaq Composite has fallen in recent weeks and is still down 7% from its high of about a month ago. However, the shift from technology to value stocks won’t last forever, Cramer said.

“Either technology stocks go too low … or long-term interest rates go too high. Until that happens, the turnover will continue to work,” he said. “We haven’t got there yet, but I’m sure we’ll get there eventually because that’s what always kills these kinds of vicious rotations.”

Cramer revealed what is circled on his calendar in the coming week. Corporate performance projections are based on FactSet estimates:

Tuesday: GameStop, Adobe

Wednesday: RH, GrowGeneration, General Mills

Thursday: Darden Restaurants

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