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Cramer is bullish on bank and industrial shares, cautious on tech and health care into Q2


Don’t rely on tech shares outperforming because the second quarter kicks off, CNBC’s Jim Cramer cautioned on Wednesday.

“If you’re hoping that happy days are here again for tech, I’ve got some lukewarm news,” he mentioned on “Mad Money.” “As the second quarter gets rolling, I think this market will become even kinder to the industrials and … the banks,” he mentioned, “and even less hospitable to tech and health care.”

Cramer highlighted Cleveland-Cliffs as a possible winner within the second quarter. The inventory shot up practically 17% on Wednesday after the metal merchandise provider launched preliminary outcomes that had been a lot stronger than anticipated.

Cleveland-Cliffs is an instance of the businesses that placing up numbers which can be attracting cash from massive fund traders, Cramer mentioned. These traders are additionally rotating away from tech shares akin to Amazon, Apple, Zscaler and ServiceNow. The 4 tech names are down greater than 5% this 12 months.

“Money managers don’t care about the most exciting long-term growth stories … they want the companies that can deliver the biggest upside surprises right here,” Cramer mentioned. “In a booming economy, that means owning boom-and-bust cyclicals, like CLF, and not the stocks of companies that may represent future growth or may not, depending on their execution and the execution of their competitors.”

The strikes are part of the reopening commerce as optimism grows in regards to the financial rebound. Investors are shifting consideration from the stay-at-home and remote-work performs of final 12 months in favor of firms that can have extra favorable year-over-year comparisons of their companies.

“It’s not just that the industrials have better comparisons year over year, you’ve got that inflation issue. … As the economy gains momentum, that tends to produce higher inflation, inflation is devastating for fantastic [growth] companies,” Cramer mentioned.

“Their stocks trade on potential earnings five to ten years down the road, but inflation means those future dollars have a lot less purchasing power, and those earnings are just eroded.”

Cramer’s feedback got here after Wall Street wrapped up the primary quarter of 2021. The Dow Jones Industrial Average jumped greater than 7% to start out the 12 months. The S&P 500 and Nasdaq Composite superior 5.8% and 2.8%, respectively.

On Wednesday, nonetheless, the Dow slipped 85 factors. The S&P 500 climbed 0.4%, and the Nasdaq Composite popped 1.5% in what Cramer known as a “countertrend rally.”

Disclosure: Cramer’s charitable belief owns shares of Amazon and Apple.

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