Wall Street’s ‘incredibly strong month’ is based on ‘hope’
CNBC’s Jim Cramer said Tuesday that investor optimism about the reopening of the U.S. economy is not warranted.
“We [haven’t] adopted universal testing … we don’t have contact tracing, we don’t have enough gloves and masks to keep everybody protected,” the “Mad Money” host said, “yet the market’s having an incredibly strong month.”
The comments come after the major stock averages broke a multiday win streak. The Dow Jones slipped 32 points, or 0.13%, and the S&P 500 fell 0.52% during the session. The Nasdaq Composite sold off 1.40%.
In the month of April, the blue-chip index has rallied 10% as of the close. The benchmark index is up nearly 11%, and the tech-heavy Nasdaq is up almost 12%.
This month’s gains can be attributed to Wall Street’s confidence in the “safety net,” Cramer said, “the one that covers large companies, even as it fails necessarily to protect a lot of small businesses and doesn’t do nearly enough for individuals.” He was referring to massive spending packages the federal government passed to shore up the economy during the economic fallout of the coronavirus pandemic.
“But you’ve also got a lot of hope driving this market. Some of these hopes make more sense than others,” he said.
Stocks continued their upward trajectory as investors anticipate states authorizing the gradual reopening of nonessential businesses across the country. Alaska, Georgia, South Carolina, Tennessee and Texas are among the first states to let some businesses continue operations after residents were ordered into a statewide lockdown. More states are expected to slowly reopen their economies in coming weeks.
Dr. Anthony Fauci, a top health official and part of the White House’s coronavirus response team, warned during the day that the country “could be in for a bad fall” later this year if an effective Covid-19 treatment is not found in the coming months. The Trump administration released a new strategy to assist states in ramping up coronavirus testing capacities, which is seen as a key part of continuing to mitigate the virus’ spread.
After Monday’s session, Cramer said the post-pandemic “new normal” will be “a lot less investable.” He also laid out about 100 equities that, in this environment, are worth investing in.
The host continued to warn that companies in the retail and nightlife categories will be tough to own as consumers slowly begin to venture outside.
“The bottom line [is] I’m trying to be an optimist, but I’m a realist,” he said. “The stocks that are running this week are the cooped-up stocks … and they’ll do better when we reopen, so they’ll continue to run — doesn’t mean that business will be good.”