As tensions between the U.S. and Iran cool, CNBC’s Jim Cramer said Wednesday’s big rally made it clear which stocks investors should buy and which to avoid as the situation stabilizes.
“If you look at the list of the best performers and the worst performers, you’ll know what’s worth owning and what’s untouchable when the dust settles,” Kramer said on Wednesday’s “Mad Money” show.
“You know what professional asset managers are going after when the market gets tough again. This is a great way to understand what will take you to greater heights and what is just a dead end,” he added.
Cramer’s comments came after stocks soared on news that President Donald Trump announced a two-week halt to U.S. attacks on Iran. The suspension marks some easing in Iran’s five-week conflict that led to the blockade of the Strait of Hormuz, a critical waterway for global energy supplies. Indeed, Kramer said questions remain about the durability of the ceasefire and the details that need to be ironed out in a long-term agreement.
Nevertheless, the Dow Jones Industrial Average rose 2.85%%, the S&P 500 rose 2.51% and the Nasdaq rose 2.8%. West Texas Intermediate crude oil fell more than 16% to $94.41 per barrel, and Brent crude oil for June delivery fell about 13% to $94.75 per barrel.
Among the Dow’s biggest winners from Wednesday’s rally were: sherwin williams, caterpillar, home depot and goldman sachsKramer points out.
“This is a pretty extraordinary group of leaders,” Kramer said. “When you see these four going up, it means investors believe interest rates are going down.”
The 10-year Treasury yield, which is tied to the 30-year mortgage rate, also fell sharply on Wednesday. Cramer has previously said lower interest rates could be key to reviving the stagnant housing market and support the broader economy while boosting stocks such as Home Depot, which hit a two-year low on Tuesday.
Caterpillar, which soared 6.51%, also “shows how great this market is,” Cramer said. “This company was very advantageous because it has multiple ways to win,” he said, explaining that the company also benefits from low interest rates that make it cheaper to finance construction projects.
As for Goldman Sachs, Cramer cited multiple reasons to buy the bank’s stock as market conditions improve. “The[Trump]administration is incredibly aggressive about building deals, so we’re going to see a flood of deals,” Cramer said. Goldman Sachs will release its report next week, and Cramer expects positive results.
As for the losers of Wednesday’s relief rally, Cramer said he wouldn’t be surprised if oil companies end up next. chevron and diamond back Make a list. Underperformance of stocks such as sales force and working day Cramer said this shows investors have not forgotten the risks of AI disruption.
Other big decliners include plastics manufacturers, including: Dow CorporationBut Kramer warned that supply disruptions in the Middle East will not be resolved overnight.
“I don’t know how easy it would be to abandon these,” Kramer said.
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