Wall Street should have been down on Tuesday, but the stock market had a huge run.
The usual suspects (tons of negative analyst notes, rising bond yields, mixed earnings, weak housing data and rising commodity prices) lined up against the market on Tuesday. Not to mention comments from Federal Reserve Bank of St. Louis President James Bullard a day earlier that a 75 basis point interest rate hike could be a possibility at an upcoming policy meeting to speed up the fight. of the central bank against inflation.
“If all the usual suspects have alibis, what can explain today’s unexpected spike,” said CNBC’s Jim Cramer on Tuesday’s “Mad Money.” “I think we tend to underestimate our advantages,” he added.
Cramer listed three main reasons for what he called the “strange action” in the market.
- The market was oversold, making it difficult for stocks to plummet.
- Cramer recalled 1994 when the Fed doubled rates and stocks still rose. If history is any indicator, Bullard’s tough talk might not be so bad after all, he said.
- Another reason for the market’s resilience on Tuesday, according to Cramer, is that the US is in a better position than other countries, which points to the reopening of the US economy and reliable energy sources.
While it’s true that inflation is a problem, Cramer has an answer for that, too.
“We got higher flank steak prices, more expensive cornflakes and higher gas bills, but we also got much higher wages to ease the pain,” he said.