CNBC’s Jim Cramer said Thursday that broader economic concerns are making it difficult for investors to reward companies with strong underlying businesses.
“There’s an incredible disconnect between stock prices and reality,” the Mad Money host said after watching the day’s events. Dow Jones Industrial Average If it falls by 1.3%, S&P500 down almost 0.9%, Nasdaq 1% back.
Bond yields rose, offsetting losses after Wednesday’s announcement by the Treasury of a plan to curb market interest rates. Earlier this week, 30 year government bond yield It exceeded 5.33%, a level not seen in nearly 20 years. This is due to concerns about inflation, which has worsened due to soaring oil prices due to the Iran war.
Kramer spoke from the construction site. micron’s At a massive new semiconductor manufacturing plant in Boise, Idaho, thousands of workers are building a facility that will eventually produce the memory chips needed for artificial intelligence. He cited the project as evidence of the strength he sees in parts of the economy even as stocks grapple with concerns about consumer conditions, high oil prices and rising interest rates.
“But unfortunately, even if you believe, as I do, that Micron stock is fundamentally undervalued, you can’t take your eyes off the broader market,” Cramer said. “At the end of the day, we always have to look at stocks through the prism of the market.” Kramer’s Charitable Trust, a portfolio managed by CNBC’s investment club, owns Micron stock, and the stock actually soared on Thursday. While Micron is still up since the start of the year, it is down about 20% from its all-time high in June.
walmart‘s latest earnings report added to the negative news on Thursday. The stock price fell 9%. Although the retail giant missed Wall Street’s expectations for quarterly sales and the company’s sales outlook, Cramer said the quarter was more mixed than the headline numbers suggested. Higher gas prices weighed on consumers in the second half of the quarter as Walmart continued to prioritize low prices and market share growth over short-term profit maximization. When gas costs more than $4 a gallon, consumers have less money to spend on other things, and with the ongoing conflict with Iran, it’s hard to know when that burden will ease.
Price was another concern. Treasury Secretary Scott Bessent told CNBC on Thursday that plans to increase purchases of long-term Treasuries could exceed the $4 billion cap floated a day earlier. Mr. Kramer questioned whether the move would significantly reduce borrowing costs, given the size of the national debt. “America is $40 trillion in debt, and if you buy back $4 billion in stock, the Secretary of the Treasury is going to look like a Dutch boy plugging a levee with his finger,” he explained.
These pressures make it difficult for even the strongest companies to escape the broader market narrative. Kramer said he sees Micron’s huge investment in the U.S. as evidence of a strong manufacturing and AI boom, but that ultimately the health of consumers is more important to the economy.
“As important as I would like to say that what’s behind me, American manufacturing, is important…two-thirds of this country’s economy is service-based,” Cramer said. That leaves companies like Micron caught between strong demand and a market preoccupied with macroeconomic risks.
“Micron’s stock price is up 4%, and that’s a great example of American exceptionalism,” Cramer said. “The problem is that the S&P 500 contains 499 more stocks, and the prism has made many of them look absolutely terrible today.”
