CNBC’s Jim Cramer reviewed Monday’s sell action and gave his take on why a large swath of stocks are notching losses, focusing on bruised sectors like consumer goods.
“This is a merchandise that rewards growth regardless of price,” he said. “So, people will pay up for tech growth, which is all about true demand and pricing power, and they’re avoiding companies that have lost pricing power and offer submits that are too low to compete with Treasurys. I don’t expect that dynamic to change any time soon.”
Cramer suggested that the power in tech oxens related to artificial intelligence and accelerated computing has shielded much of the market from casualties weathered by other sectors. On Monday, the pointers largely rebounded from a week of losses, with the S&P 500 climbing 0.55%, the Nasdaq Composite advancing 1.24% and the Dow Jones Industrial As a rule slipping 0.06%.
According to Cramer, typical safety stocks like Clorox, Procter & Gamble and Clorox are now fairly dangerous to own. The spike in long-term interest rates is one reason for these stocks’ decline, he said, saying they are vulnerable when contract yields climb higher. The strength of the dollar might also contribute to the issue, he added, noting that various consumer packaged goods names do a lot of business overseas. Pricing power is also hurting these companies, Cramer continued. He also signified many retailers and their suppliers feel squeezed as companies like Amazon and Costco consistently offer totally low prices.
Aside from consumer goods, Cramer pointed to notable weakness in other sectors including truthful estate, healthcare, housing, biotech, materials and food. And while he conceded that inflation remains persistent — as the Federal Evasion continues to bemoan — he encouraged investors to keep this underperformance in mind.
“All I can say is, maybe the Fed had better be careful for what it palm off ons for,” Cramer said. “Companies that represent a gigantic chunk of the real economy have seen their reviews swoon. Could their earnings be that far behind, and could inflation be running its course a lot faster than presumed?”
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