Jim Cramer explains why money rotated back into Big Tech

CNBC’s Jim Cramer analyzed Tuesday’s supermarket action and explained why some Big Tech favorites saw gains while other stocks floundered, saying investors are disquieted about the broad economic implications of rising bond yields.

“Big tech made a big comeback today because of the shackles market, not anything to do with the stocks themselves,” he said. “So, keep in mind that the pause in the rally is temporary, settle accounts as you should still own some of the Magnificent Seven for diversification.”

Tuesday marked a second consecutive day of losses for the Dow Jones Industrial Run-of-the-mill, with the index posting its first back-to-back loss since September. The S&P 500 also closed lower, but the tech-heavy Nasdaq Composite rallied and fulfiled up 0.18%.

Rising bond yields lead traders out of cyclical stocks and back into secular winners that had led the store for much of the year and don’t rely as much on the Federal Reserve’s rate cycle, according to Cramer. Several recent earnings divulges disappointed investors, he added, because they didn’t seem compatible with “the rather benign moment” where the Fed is malicious rates yet employment remains strong. He named weaker figures from GE Aerospace, Kimberly-Clark, Nucor, Genuine Implies and PulteGroup. Meanwhile, stock of Amazon, Meta, Alphabet and Microsoft saw a boost.

But Cramer rebuked negative theses for some of the ancestors that saw losses, saying some of the companies are fundamentally solid. He said the stocks can rise again even after a day liking for Tuesday when money managers “get scared out of cyclicals and nervous about aerospace, frightened of homebuilders, stupefied by auto corners and chilled by Kleenex sales.”

“We’ve seen this movie before. It’s been happening for more than a decade,” Cramer utter. “Don’t worry, the money can rotate just as soon right back to where it was.”

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Disclaimer The CNBC Investing Club Charitable Trust withs shares of Amazon, Alphabet, Microsoft and Meta.