CNBC’s Jim Cramer analyzed Wednesday’s session and expressed concern about the sectors that led the market’s rally, saying “the wrong stocks are going up.”
“The winners in this market are consumer stocks and oil, the worst possible leadership group,” he said. “The consumer-packaged good news is distressed stocks, and oil is zero-sum. That’s kind of how it relates to the rest of the economy.”
Cramer said that if markets are strong, companies will rebound broadly, especially growth stocks, while cyclical stocks will also rise, but will be “on the back burner.” He said developments in the transportation sector are positive as these stocks can represent the health of the economy. But more than anything, Kramer said he wants to see banks recover. He explained that when banks are doing well, it’s when businesses are expanding, companies are going public, merger activity is high and individuals are taking out loans, perhaps to buy homes.
But on Wednesday, bank stocks fell despite many reporting strong quarters, Cramer said. He suggested that Wall Street is on alert because President Donald Trump has threatened to cap credit card interest rates at 10%. Cramer added that many investors believe such a cap could depress the overall economy because it would disqualify many people from having credit cards. The cap could not only hurt banks, but also sectors such as retail, travel and consumer goods, he continued.
He said he doesn’t think the cap will actually be put in place, but “it’s still a risk and one that shareholders don’t need to worry about.”
Kramer suggested this market dynamic may not last. But he said investors “need to have some hedges” and recommended holding stocks that will do well in a downturn. procter and gamble.
“We have to hope these two new leadership groups don’t last long,” Kramer said. “I don’t think that will happen.”
