CNBC’s Jim Cramer said that Tuesday’s stock market rally was made possible by cooling bond yields and favorable commentary from Federal Reserve Chairman Jerome Powell.
“Sometimes, there’s just too much good news to ignore,” the “Mad Money” host said after the Dow Jones Industrial Averaged gained 0.51%, S&P 500 rose 0.92% and the tech-heavy Nasdaq Composite jumped 1.41%.
Wall Street is off to a rocky start in the new year, with equity markets struggling against the backdrop of rising bond yields, which move inversely to prices. Cramer said that move in Treasurys was a key reason why so many stocks, especially those in the S&P 500, were being sold early in 2022, namely by large money managers and algorithmic traders.
But with bond yields falling on Tuesday and Powell’s congressional testimony emphasizing a data-based approach to interest rate hikes, Cramer said it cleared the way for investors to search for attractive stocks to purchase.
“We see the trees through the forest, so to speak. And it turns out, while the forest was looking pretty terrible, there are enough healthy trees that it makes sense to do some buying,” said Cramer, whose charitable trust on Tuesday added to its positions in Bausch Health and Danaher.
Cramer said other stocks shook off slumps and performed well Tuesday, including Amazon, after Morgan Stanley raised its price target. He also mentioned Apple, saying the iPhone maker’s shares finally caught a bid after some positive research notes in recent days.
“The bottom line? When bonds finally go in the right direction and Jay Powell stays thoughtful, we get ourselves a stock picker’s market like we had today,” Cramer said. “You have to be ready for these because a stock market that dies by the bond market’s sword can also prosper from it.”
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