The stock market is riding on reopening optimism, which is causing technical stocks to fall and cyclical stocks to rise during Tuesday’s session, says CNBC’s Jim Cramer.
While the largest averages were down at the end, Cramer said the move was defined by a decrease in consistent operators and an increase in sporadic boom-and-bust stocks.
“It’s about optimism, people. Investors are voting with their feet,”Crazy sums“said the host.” They are leaving these secular growth stories, the stocks of companies that are doing well whether the economy is hot or cold. Instead, they find themselves in stocks in companies that only make big money when business is booming. “
The comments come after the overall market withdrew from gains made on Monday, which followed a tough sale last week. The Dow Jones Industrial Average on Tuesday, 144 points slid to 31,391.52 for a decline of 0.46%. The S&P 500 reduced 0.81% to 3,870.29. The technically heavy Nasdaq Composite fell 1.7% to 13,358.79.
The S&P sector indices also traded lower during the session, with the exception of material. The most technical and consumer parts of the market had the toughest performance, with both indices going to Nasdaq and declining more than 1%.
Cramer said the market activity reflects investors betting that citizens will soon be able to release their Covid-19 protective masks and states will soon be able to release coronavirus restrictions and restore the economy to normal thanks to the country’s progress on the vaccine front. There is still a tug-of-war between those who are optimistic and those who are cautious, he added.
Governors of Texas and Mississippi announced earlier Tuesday plans to remove worm-bearing mandates and all restrictions on business in their states.
“They are betting that we will soon be able to remove our masks and go back to normal, and that is the core of this market right now,” Cramer said. “At the moment, the people who believe that our long national nightmares are coming to an end. They are the ones who win.”
However, he warned that the moment in the market is still vulnerable to risks. Cramer said the country could be opened up too quickly and that variants of the virus, such as the strain first discovered in South Africa, could lead to a new nail if the country lets its protection go down.
While President Joe Biden expects to sign an $ 1.9 trillion stimulus spending package that will make it through Congress later this month, anyone hiccuping about pushing the bill through the Senate could have an impact on the market.
“There’s still a lot that can go wrong,” Cramer said.