CNBC’s Jim Cramer said he was encouraged by the trading activity he saw in technology and growth stocks as the market continued to grapple with fears that inflation would rise on Friday.
He cautioned, however, that investors should be prepared for how the market might react to the February work report due out late next week.
“If we get any strength here at all, please be prepared for another tsunami of sales when interest rates rise and stocks fall,” said the host of Mad Money, predicting this will be a major interest rate move on the bond is market would shoot. “Without ugly numbers, growth stocks are in trouble.”
Cramer commented after the market closed lower for the second straight week as the bond sale turned into stocks.
The Dow Jones Industrial Average fell nearly 470 points on Friday, falling 1.5% to 30,932.37. The index also ended the week down 1.78%.
The S&P 500 fell 0.48% to 3,811.15, down 2.45% this week.
Though the day ended up 0.56%, the tech-heavy Nasdaq Composite suffered the most this week after falling nearly 5% to 13,192,345. Friday’s surge was due to a rebound in big tech stocks.
“I don’t know if the growth names can withstand the pain, but today’s meeting gave us a glimmer of hope that they can still make some profit amid inflation fears,” said Cramer. “If you don’t like the pain … you might want to take advantage of moments like this on the Nasdaq, take profits and prepare for a Friday swoon and be ready to buy stocks like Costco.”
The US Treasury’s 10-year return, a key metric in consumer credit interest rates, fell nearly 1.4% on Friday, after surpassing 1.6% the previous day for the first time in about a year. The increase was due to the sale of bonds.
If rates fall, major industrials will lose momentum, as seen in the Dow’s fall, but cloud, semiconductor and cybersecurity stocks have been positive, Cramer said.
Bond investors who cut their holdings are betting that the Federal Reserve could change their minds and raise the policy rate from near zero when the economy recovers from the pandemic-triggered recession, he added.
“Inflation is a nightmare for people who own bonds. Who wants a piece of paper that pays 1.5% when inflation could break 2%? They lose every day,” Cramer said. “That’s why these people dumped bonds and their wholesale sales always shatter the stock market.”
Cramer announced his schedule for the coming week. The earnings per share forecasts are based on FactSet estimates:
Monday: Zoom video, lemonade
Zoom video
- Q4 2021 Results publication: After Market; Conference call: 5 p.m.
- Projected EPS: 81 cents
- Estimated Revenue: $ 910 million
lemonade
- Publication of results for the fourth quarter: after market entry; Conference call: 8 a.m.
- Estimated losses per share: 64 cents
- Estimated Revenue: $ 19.2 million
Tuesday: Destination, Nordstrom
target
- Q4 results published: before the market; Conference call: 9 a.m.
- Projected earnings per share: $ 2.54
- Estimated Revenue: $ 27.4 billion
Nordstrom
- Publication of results for the fourth quarter: after market entry; Conference call: 4:45 p.m.
- Projected EPS: 14 cents
- Estimated Revenue: $ 3.58 billion
Wednesday: Dollar Tree, Wendy’s, American Eagle Outfitters
Money tree
- Q4 results published: before the market; Conference call: 9 a.m.
- Projected earnings per share: $ 2.12
- Estimated Revenue: $ 6.8 billion
Wendy’s
- Q4 results published: before the market; Conference call: 8:30 a.m.
- Projected EPS: 18 cents
- Estimated Revenue: $ 477 million
American Eagle Outfitter
- Fourth quarter results to be published: 4:15 pm; Conference call: 4:30 p.m.
- Projected EPS: 36 cents
- Estimated Revenue: $ 1.28 billion
Snowflake
- Publication of results for the fourth quarter: after market entry; Conference call: 5 p.m.
- Estimated losses per share: 16 cents
- Estimated Revenue: $ 332 million
Thursday: Kroger, Costco
Kroger
- Q4 results published: before the market; Conference call: 10 a.m.
- Projected EPS: 69 cents
- Estimated Revenue: $ 30.86 billion
Costco
- Q2 2021 results to be published: 4:15 p.m.; Conference call: 5 p.m.
- Projected earnings per share: $ 2.44
- Estimated Revenue: $ 43.72 billion
Disclosure: Cramer’s charitable foundation owns shares in Costco.
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Correction: This article has been updated to accurately reflect that projected revenue for Zoom Video is $ 910 million and projected revenue for Lemonade is $ 19.2 million. An earlier version of this story gave an incorrect projection for both of them.
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