CNBC’s Jim Cramer on Tuesday said Wall Street has been buoyed by a succession of positive news in the past week.
From the number of states restarting their economies to the current state of the oil market to government intervention, investors are not as worried about how much the economy could crumble.
“I’m not saying this market’s done going down. There’s always the possibility that we get more sell-offs, like we did at the end of the [trading] day,” the “Mad Money” host said.
The Dow Jones dropped 390.51 points, or 1.59%, to 24,206.86 during the session, one day after the blue-chip index surged more than 900 points. The S&P 500 closed down 1.05% at 2,922.94. The Nasdaq Composite turned in a positive session, moving up 0.54% to 9,185.10.
The market pulled back after Moderna reported positive data about its vaccine trials on Monday, but experts on Tuesday questioned how groundbreaking the information truly was. Shares of the biotech company cratered 10% during the session, one day after popping nearly 20%.
“Even if Moderna’s vaccine news was blown out of proportion by people who need some remedial statistics lessons … the fact is that we’ve probably taken a depression off the table,” Cramer said, highlighting other events that injected confidence in the market.
Despite the historic job losses caused by the coronavirus pandemic, there is pent-up demand in the economy, Cramer said, pointing out that Home Depot and Walmart both reported seeing business improve in May.
In unprecedented fashion, crude prices collapsed to negative $37 about a month ago. The oil market has since bounced back to $32.50 per barrel as of Tuesday evening. That means oil producers will be able to pay bills, removing a lot of pressure on the banks that they borrow from, Cramer said.
Last, the Federal Reserve’s move to buy bonds of struggling companies, such as Carnival, and the Treasury Department’s move to step in and help those in the airline industry gave a lifeline to hard-hit businesses, he added.
Fed Chairman Jerome Powell told CBS’ “60 Minutes” over the weekend that the central bank is “not out of ammunition by a long shot” to support the beleaguered economy.
“Anything that makes a depression less likely causes stocks to explode higher, and that’s what yesterday’s rally was really about, even as we gave up some of those gains today,” Cramer said.
Cramer’s comments echoed those of the Fed chief, who also predicted that the U.S. economy could contract by 30% in the current quarter but brushed off concerns of an impending depression.
“That doesn’t mean there’s no more downside, but it does mean we likely won’t be revisiting the March lows,” Cramer said.
