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At the start of the second quarter, CNBC host Jim Cramer cautioned against investing in tech and healthcare stocks.
What happened: Cramer said he was bullish on industrial and banking stocks and advised investors to focus on booming cyclical stocks in a booming economy.
“As the second quarter unfolds, I think this market will become even more favorable to industrialists and… banks and even less hospitable to technology and healthcare,” Cramer said on the “Mad Money” show. from CNBC.
Cramer touted as the supplier of steel products Cleveland-Cliffs Inc. (NYSE: CLF) as the likely winner in the second quarter.
According to Cramer, the company is releasing numbers that attract money from large fund investors who are moving away from tech stocks such as Amazon.com Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Zscaler Inc. (NASDAQ: ZS) and ServiceNow Inc. (NYSE: NOW). The shares of the four tech companies are down 5% to 14% for the cumulative time of the year.
Cleveland-Cliffs stock jumped nearly 17% in Wednesday’s trading session after the company provided updated financial guidance for the first and second quarters as well as fiscal 2021. The company will report its first quarter results on April 22.
Portfolio managers are interested in companies that may offer the biggest surprises on the upside and don’t care about the most exciting long-term growth stories, according to Cramer. He also noted that higher inflation as the economy gains momentum could be devastating for stocks of companies that may represent future growth.
See also: Return on capital employed overview: Cleveland-Cliffs
Why is this important: US stocks closed largely higher on Wednesday, the last day of the first quarter. The S&P 500 added 0.4% and the high-tech Nasdaq Composite rose 1.5%, while the Dow Jones Industrial Average fell 0.3%. However, Cramer called the Nasdaq Composite’s advance a “counter-trend rally”.
While tech stocks rose sharply last year amid the pandemic, investors are now focused on the recovery and cyclical stocks in heightened optimism about government spending and vaccinations against Covid.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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