Stocks on Wall Street ran higher Tuesday on “clueless buying,” CNBC’s Jim Cramer said after the market closed for the day.
Some of the action drew scorn from the former hedge fund manager, who had some words for enthusiastic buyers that put money to play.
“Last night, I told you not to overthink the run in the Covid stocks. Sometimes the market rallies and it makes perfect sense,” the “Mad Money” host said. “Then there are days like today, when I can’t take how stupidly bullish this market can be.”
U.S. equities traded higher as Wall Street continued to digest results from the current earnings season. About 70% of S&P 500 companies have reported quarterly results.
The Dow Jones industrials added 164 points for a 0.62% gain at the close, finishing at 26,828.47. The S&P 500 advanced 0.36% to 3,306.51 and the Nasdaq Composite trekked 0.35% higher to another record close of 10,941.17.
Cramer offered another takeaway from Tuesday’s action: “Never underestimate the power of enthusiastic buyers who do not know what they’re doing.”
He called out the misguided rush into oil producer BP and delayed appetite for biopharmaceutical products maker Sorrento Therapeutics, both of whose stocks rallied higher.
“Sometimes the stock market roars and it makes perfect sense, but there’s also plenty of stupidity, especially during earnings season when there’s so much news that it’s hard to keep track of what’s going on,” he said.
Shares of BP, which reported quarterly results before the morning bell, surged more than 7% Tuesday and Cramer was perplexed. The energy giant, which raised its dividend by 2.4% before the coronavirus outbreak devolved into a pandemic earlier this year, cut its dividend in half after revealing that it lost $6.7 billion in the second quarter.
The rally drew scorn from Cramer, who said it is vying for “dumbest action of the year” and noted that the stock made bigger gains on this quarter report than it did when the company announced that it raised its dividend in the first half of the year.
“Not only are they telling you business is terrible, BP is trying to distance itself from crude while preserving cash, but maybe that dividend hike was a mistake,” the host said. Tuesday’s rally was a “bigger gain than they got in February when they told you business was great and they raised the dividend.”
As for Sorrento, Cramer noted that he recommended the stock was a buy when it was at $8 a number of weeks ago. When the company announced last Wednesday a new saliva-based Covid-19 test that yields within half an hour, the stock price rose 3%.
On Tuesday, however, Sorrento shares jumped 31% to a new closing high of $12.84.
“Turns out the market was just stupid because today, on the exact same news … Sorrento rallied 31% to just under $13. The stock market’s supposed to be efficient, but somehow it took Wall Street six days to process this news.”
