President Donald Trump’s threat to hike tariffs on Chinese goods sent investors shifting their investments into other bull sectors of the market, CNBC’s Jim Cramer said Monday.
“When the averages got hit this morning on new Chinese worries, people almost instantly pulled out their shopping lists and started buying high-quality domestic stocks that have nothing to do with the trade war,” the “Mad Money” host said. “That’s a very bullish sign.”
Wall Street hates tariffs and trade wars, Cramer said, but it was interesting to see the market rebound from deep declines early in the session.
The Dow Jones Industrial Average fell more than 470 points at the beginning of trading, but recovered much of the losses to finish about 67 points down. The S&P 500 fell under 2,800 before closing 0.45% in the red at 2,932.47. The Nasdaq Composite ended the day down 0.50%.
“Normally when the market gets hammered, people wait around for a few days before putting their money back to work. Not today,” Cramer said.
Domestic companies that saw upside from Monday’s moves included UnitedHealth Group, Kellogg, Hershey, Kimberly-Clark, Disney and McDonald’s, Cramer noted. Google’s parent Alphabet also gained 0.33% Monday after losing nearly 8% in the past five trading days.
“When money flows out of one sector, it tends to flow into another one. Sure, some of it stays on the sidelines because the market is uncertain, but most of it tries to find a new home immediately,” Cramer said.
Among Monday’s losers, shares of Apple, which has a long supply chain in China, fared relatively well, losing just 1.5%, the host said. Because the tech giant is becoming a services and consumer company, any China-related weakness looks like a speed bump, Cramer said.
“I am thrilled that [Apple CEO Tim Cook] is embracing the consumer product story because that will ultimately allow research firms to change their coverage — switching Apple from the technology universe to the consumer product universe,” he said. “That’s why Apple barely got dinged today. You put it all together and today’s rebound paints a very bullish portrait.”
Trump tweeted on Sunday that he would increase tariffs on $200 billion worth of Chinese imports to 25%, effective Friday, and tack a 25% tariff on another $325 billion worth of goods from the country in due time.
Disclosure: Cramer’s charitable trust owns shares of Apple, Walt Disney, and UnitedHealth Group.
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