CNBC’s Jim Cramer examined why the market rallied on Tuesday, saying buyers were encouraged by last week’s consumer price index, and that many anticipate former President Donald Trump will win in November. But he emphasized that investors who haven’t already bought into this market have missed their chance to take advantage of the rally.
“If you’ve been waiting for the market to broaden out, you most likely missed this mid-summer bounty. In the end, it doesn’t matter if you think the rally’s being caused by the possibility of a Trump presidency, or the decline in inflation, or the likelihood that the Fed will start cutting rates,” Cramer said. “What matters most is that, unless you’re invested all the time, instead of trading in and out and in and out, you’ll miss these enormous moves.”
The market broadened beyond Big Tech on Tuesday, with Wall Street bullish on small-cap and cyclical stocks. The Dow Jones Industrial Average surged 1.85% to close at a record, and the Russell 2000, which represents small- and medium-sized companies, climbed more than 3% to notch a fifth straight day of gains.
Stocks in the homebuilding and retail sectors saw gains and Cramer suggested this is because inflation seems to be cooling, which makes it more likely the Federal Reserve will make long-awaited rate cuts.
Smaller businesses are also rallying because investors anticipate Trump’s return to the White House, which could lead to a rollback in regulations. Fewer regulations mean companies can merge more easily, Cramer said, and the smaller a company is, the easier it is to buy. And while megacaps can navigate a high regulatory environment, small medium-sized businesses can’t because they “don’t have the money or the connections to fight back,“ he added.
However, Tuesday’s action doesn’t spell the end of megacap success, he said.
“Don’t worry, the big cap techs aren’t finished,” Cramer said. “But they might be paused until the small caps finish playing catch-up, which could take some time.”
