Shares trade on reopening optimism, but risks remain

The stock market is set to reopen with optimism, causing technical stocks to fall and cyclical stocks to rise during Tuesday’s session, CNBC’s Jim Cramer said.

While the major averages were all lower at the end, Cramer said the action was driven by a decrease in consistent operators and an increase in sporadic boom-and-bust stocks.

It’s all about optimism, folks. Investors vote with their feet, “said the host of” Mad Money. ” “They are leaving these secular growth stories, the stocks of companies that are doing well regardless of whether the economy is hot or cold. Instead, they are making their way into stocks of companies that only make a lot of money when things are booming.”

The comments come after the overall market pulled back from Monday’s gains, which followed a tough sell-off last week. The Dow Jones Industrial Average fell 144 points to 31,391.52 on Tuesday, representing a drop of 0.46%. The S&P 500 retreated 0.81% to 3,870.29. The tech-heavy Nasdaq Composite fell 1.7% to 13,358.79.

S&P sector indices also traded lower during the session, excluding materials. Technical and consumer goods parts of the market were the hardest to spot, with both indices joining the Nasdaq and declining more than 1%.

Cramer said the market activity is reflective of investors betting on the chance that citizens will soon be able to drop their Covid-19 protective masks and that states could soon lift coronavirus restrictions and return the economy to normal, thanks to the country’s progress. in the field of vaccines. Still, a tug of war remains between those who are optimistic and those who are cautious, he added.

Texas and Mississippi governors earlier Tuesday announced plans to lift mandates for wearing masks and all restrictions on business activities within their states.

“They’re betting that soon we’ll be able to take our masks off and go back to normal, and that’s the crux of this market now,” said Cramer. “Right now, the people who think our long national nightmares will end are the ones who are winning.”

However, he warns that the moment in the market is still vulnerable to risk. Cramer said the country could reopen too soon and that variants of the virus, such as the strain first discovered in South Africa, could trigger another spike if the country drops its guard.

While President Joe Biden expects to sign a $ 1.9 trillion stimulus package running through Congress later this month, any hiccups in the Senate passing the bill could have an impact on the market.

“A lot can go wrong,” said Cramer.