CNBC’s Jim Cramer said the stock market’s muted reaction to escalating tensions in the Middle East shows investors are focused on forces far larger than geopolitics.
“When I saw the news…I had to believe we were just going to get robbed today,” the “Mad Money” host said, referring to last weekend’s headlines about Iran closing the Strait of Hormuz again.
Despite US oil benchmarks; west texas intermediate crude oilsoaring more than 5% on Monday, with the stock “barely blinking.” of Dow Jones Industrial Average It was relatively unchanged, with only a 4.87 point decrease. S&P500 down 0.2.4%, Nasdaq It fell by 0.26%.
This resilience comes after a strong rally that saw the S&P 500 and Nasdaq close at record highs on April 17th. If oil prices had skyrocketed in one day at the start of the Iran war, stocks would have been more volatile than they are today.
Kramer cited four reasons why that didn’t happen.
First, he points to the bond market, which he has repeatedly said is the real driver of stocks.
“The stock market is reacting to the bond market,” Cramer said, noting that even as oil prices rise, interest rates remain unchanged. The stability suggests investors are not bracing for a spike in inflation and are expecting interest rate cuts from Kevin Warsh, the man chosen by President Donald Trump to replace Jerome Powell, when he takes over as Fed chair.
Second, Cramer said the direct economic impact of rising oil prices may not be as great as in the past. While industries such as airlines and cruise lines may feel pressure from rising fuel costs, the broader market appears to be less sensitive.
“People are starting to realize that gasoline is not as important to our lives as it once was,” he said, citing improvements in fuel efficiency and America’s reliance on cheap domestic natural gas. “Most homes are heated and cooled with natural gas, and utility bills may actually be going down.”
He also emphasized that strong corporate earnings are a stabilizing factor.
Results for companies such as cleveland cliffs He pointed out the sound manufacturing background. CEO Lorenco Goncalves said the company’s “order book is full and auto OEMs are increasingly reserving steel from Cliffs,” highlighting stable demand conditions despite growing uncertainty.
Finally, Kramer said the market continues to be driven by what he calls the AI revolution.
“This AI revolution knows nothing about Iran. It doesn’t know anything about bombing. It doesn’t run on gasoline. And it won’t stop for anyone,” he said.
He pointed to a broad ecosystem of companies benefiting from chipmakers’ AI builds, including: Nvidia and advanced micro device to a cloud provider like microsoft and alphabet. Cramer’s Charitable Trust, a portfolio used by the CNBC Investment Club, owns Alphabet, Microsoft, and Nvidia.
“Here’s the bottom line: I’m not saying the Iran war isn’t important. If something catastrophic were to happen…it would impact the market…(but) until the war gets bad enough to impact the bond market, don’t expect it to be important to the stock market.”
