Cramer talks about buying growth stocks after fear of inflation shaking market

CNBC’s Jim Cramer reported that market participants have two ways of approaching high-growth stocks that fluctuated and staggered during a volatile session on Tuesday on Wall Street.

Investors can choose to participate in the settlement that launched some technology names like Apple into negative trading territory this year.

The other choice – following the suggestion of Federal Reserve Chairman Jerome Powell’s reaffirmed commitment to keep interest rates at low levels – is to hold back and consider loading worthy stocks discounted from their highs, Cramer said after the market closed mixed.

“After recovering late today, it is not too late to sell the most notoriously expensive shares if you want to,” said the host of “Mad Money”. “But as for the best-growing stocks, below more than 10% of their highs, call me a buyer. Not all at once, not a big one, but still a buyer in any retest of that 9:47 low we saw today. “

Cramer’s assessment of the current state of the market follows a roller coaster trading day, where the US main averages jumped from their session lows. The market experienced a strong settlement in the morning, with the Nasdaq Composite falling almost 4% at its low, before the Dow Jones blue-chip and the S&P 500 benchmark managed to make modest gains at the close.

The Dow advanced more than 15 points to 31,537.35 for a gain of 0.05%. The S&P 500 ended 0.13% higher at 3,881.37 to end its losing streak at five. The Nasdaq, which has a heavy weight in technology, failed to gather enough for a positive day, dropping 0.5% to 13,465.20, extending Monday’s losses.

“I am happy to consider the idea that you need to close the record here, but I like growth stocks in a frightening fright. I like growth stocks when risk is active. I like growth stocks when risk is disabled” , Cramer said.

“If you want to keep growing stocks … you have to be prepared to suffer a little bit, just like in late 2015 and early 2016 – that was the last big time to buy these stocks – or you can just do some sales if you want and try to go back to a lower level, “he added.

The market has struggled through a rotation, as investors exchange growth and technology stocks that outperformed the pandemic for value games from companies that should see business returns with the economy reopening. The Nasdaq is now 4.5% below its closing high earlier this month.

Worries that a resumption of inflation could prompt the Fed to raise interest rates, as it did twice in a three-month period between 2015 and 2016, has taken investors out of growth stocks in the past few days, Cramer said. Higher rates pose a challenge to growth and utility stocks.

Stock prices for Apple, Salesforce and ServiceNow fell by at least 3% this week.

During an appearance in Congress on Tuesday, however, Powell told lawmakers that inflation remains “low”, that the labor market faces continuing challenges and that the central bank is committed to its current monetary policy.

This reassured investors about interest rates, helping the market to recover some losses.

“This time, our Fed chief has promised to postpone the rate hike – many unemployed – but there will come a time and a point when these growth actions will be somewhat desperate,” said Cramer. “They will look like they were today … before people came to buy.”

Correction: This story has been updated to reflect the correct number of points Dow has made progress.

Disclosure Cramer’s charity fund has shares in Apple and Salesforce.

Disclaimer