On Thursday, the market experienced a significant rally, with the Nasdaq Composite reaching its first record high since 2021. Jim Cramer, the host of CNBC’s “Mad Money,” has offered his insights into the reasons behind this surge.
What Happened: Cramer attributed the market’s upward trend to the continued strength of the tech sector and new inflation data, reported CNBC on Thursday.
“What mattered was the one-two punch of an economy that’s just right—meaning still potentially ripe for rate cuts, it could happen—and the fact that AI is alive and well,” Cramer said.
He pointed to the January personal consumption expenditure price index, a key metric for the Federal Reserve when considering interest rates. The index showed that inflation had risen in line with expectations. Cramer found this encouraging, even though it did not necessarily indicate imminent rate cuts.
The Nasdaq Composite surged to its first record high since 2021, rising by 0.9% as technology and semiconductor stocks experienced gains. Similarly, the S&P 500 reached a new record, increasing by 0.52%, while the Dow Jones Industrial Average edged up by 0.12%.
Cramer also addressed concerns about the AI trend slowing down, particularly after Snowflake Inc SNOW experienced an 18% drop due to weak guidance and the departure of its CEO. However, Salesforce Inc CRM issued a positive forecast, leading to a 3% increase in its stock and a subsequent rise in other tech stocks.
Why It Matters: This recent market rally follows Cramer’s advice to investors to stay positive amid market uncertainties. He highlighted the outperformance of specific companies, such as Domino’s Pizza Inc and Palo Alto Networks Inc, as a sign of the market’s resilience.
Furthermore, Cramer has been urging investors to look beyond earnings figures and consider other factors when evaluating stocks. He believes that the current method of reporting on stocks is leading to false judgments.
Additionally, Cramer has been advising investors to consider potential high-yield investments beyond the Magnificent Seven tech stocks. He suggests that investors might be missing out on significant gains if they only focus on these mega-cap tech companies.
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