Cramer Says Forget Tech And Look To These Sectors In Q2

As the second quarter kicks off, CNBC host Jim Cramer has cautioned against investing in tech and healthcare stocks.

What Happened: Cramer said he is bullish on industrial and bank stocks and advised investors to focus on the boom-and-bust cyclical stocks amid a booming economy.

“As the second quarter gets rolling, I think this market will become even kinder to the industrials and … the banks and even less hospitable to tech and health care,” Cramer said on CNBC’s "Mad Money" show.

Cramer touted steel products supplier Cleveland-Cliffs Inc. CLF as a likely winner in the second quarter.

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According to Cramer, the company is putting up numbers that are attracting money from big fund investors who are shifting away from tech stocks such as Amazon.com Inc. AMZN, Apple Inc. AAPL, Zscaler Inc. ZS and ServiceNow Inc. NOW. The shares of all the four tech companies are down in a range of 5% to 14% for the year-to-date period.

Cleveland-Cliffs’ stock jumped almost 17% in Wednesday’s trading session after the company provided updated financial guidance for the first and second quarters as well as for fiscal 2021. The company will announce its first-quarter earnings results on April 22.

Money managers are interested in companies that can deliver the biggest upside surprises and are not bothered about the most exciting long-term growth stories, according to Cramer. He also noted that higher inflation as the economy gains momentum could be devastating for stocks of companies that may represent future growth.

See Also: Return On Capital Employed Overview: Cleveland-Cliffs

Why It Matters: U.S. stocks closed mostly higher on Wednesday, the last day of the first quarter. The S&P 500 added 0.4% and the tech-heavy Nasdaq Composite rose 1.5%, while the Dow Jones Industrial Average declined 0.3%. However, Cramer called the Nasdaq Composite’s advance a “countertrend rally.”

While tech stocks gained strongly last year amid the pandemic, investors are now shifting focus to recovery and cyclical stocks amid increased optimism about government spending and Covid vaccinations.