CNBC’s Jim Cramer warned Tuesday that investors should not turn bullish in the midst of a relief rally on Wall Street and take the time to do some profit-taking.
“Today seemed like a genuine relief rally, meaning it was motivated by a sense of relief that we’ll make it through the epidemic intact, or at least in much better shape than we thought a few days ago,” the “Mad Money” host said. “But let’s not get ahead of ourselves — to me, this is an opportunity to do some portfolio reshuffling.”
The Dow Jones Industrial Average has recovered nearly all of its losses after tanking more than 600 points on Friday as investors grew weary of the coronavirus outbreak. The 30-stock index has turned in two straight positive days, climbing about 550 points to 28,807.63 at Tuesday’s close.
The S&P 500 and Nasdaq Composite have bounced back — and then some — from Friday’s market-wide sell-off. The tech-heavy index closed at a new high.
U.S. health officials have made efforts to suppress the flu-like virus from spreading in the country, which Cramer credited for helping the market rebound. The Centers for Disease Control and Prevention has quarantined hundreds of Americans and permanent residents who have traveled to the Hubei province, the epicenter of the epidemic in China, in recent weeks. Meanwhile, the Trump administration has barred entry to anyone who has traveled to Hubei who is not a citizen or permanent resident.
As of Tuesday morning, there have been about 20,900 cases and at least 427 deaths attributed to coronavirus around the globe. In the U.S., 11 have been diagnosed with the disease.
“The remarkable thing here is what I would call the CDC’s new level of certainty. When they addressed the coronavirus outbreak last week … they gave us very little certainty about anything — from detection to prevention,” Cramer said.
“The CDC scared us out of our wits on Friday, knocking 600 points off the Dow, then they were confident as all get out today, sending the Dow up another 400 points,” Cramer said.
The host continued to harbor reservations, however, as health experts warned the epidemic in China could reach global pandemic levels. The coronavirus has reportedly put a dent in China’s auto industry and delayed exports that are part of the U.S.-China “phase one” trade deal. A Chinese health official said during a press conference earlier in the day that the fatality rate in the city of Wuhan “should gradually decline.”
Cramer said there is too much uncertainty surrounding the outbreak and China’s economy to place sure bets in the market.
“Between the illness and the quarantine and the fear of going out, the Chinese economy is slowing down,” he said. “So I’d use this rosy moment to reposition, do some selling in stocks that are too levered to Chinese consumer travel … I think those have got downside.”
Source: Business - cnbc.com
