Cramer said that the software companies’ nightmare that has been persisting may finally be over.
CNBC’s Mad Money Host Jim Cramer believes that the ongoing inflation is at the advantage of stocks that have been struggling to stay afloat over the past months. He noted that the peak of inflation was bound to happen, and the stock market would be affected. Cramer added, “you had to be deliberately obtuse to miss this because commodity prices have been collapsing a while ago, but now it’s undeniable.”
“Peak inflation in nirvana for stocks, especially for out-of-favor stocks, like fast-growing tech plays or the financials or the consumer discretionary names. That means you can buy everything from Microsoft to Wells Fargo to Target.”
At press time, Microsoft Corporation (NASDAQ: MSFT) stock is up 0.10% to $289.45, having closed up 2.43%. Wells Fargo (NYSE: WFC) also closed up 2.14% and is currently up 0.38% in premarket trading, while Target Corporation (NYSE: TGT) closed at a gain of 2.76%. However, the big box store company is currently down 1.04% in premarket trading.
Jim Cramer Says Peaking Inflation Is “Nirvana” for Stocks
On Wednesday, the Dow Jones Industrial Average grew 535.10 points (1.63%) to close at $33,309.51. Meanwhile, the S&P 500 increased to its highest level since early May at 2.1% for 4.210.24. The Nasdaq Composite also spiked 2.89% to $12.854.80- its best close since late April. While economists expected the consumer price index to pump 8.5% YOY, the index rose 8.5%. The figures were a relief to many who were not expecting an inflation slowdown. In reaction to the numbers, Quadratic Capital Management founder Nancy Davis noted that the Federal Reserve may begin to slow the pace of monetary tightening if the declining inflation persists. In his words, the current level of inflation is a good time for investors to embrace their desired stocks. The Mad Money host said:
According to Cramer, the index increase does not mean that the economy is wholly out of the bad spot. He said peaking inflation could trigger stocks rebound even in the middle of an economic slowdown.”
“Some companies will absolutely be hurt by the upcoming recession, but others will see their stocks soar because they’re worth more in an environment where inflation is at last possibly under control.”
Speaking further, Cramer said that the software companies’ nightmare that has been persisting may finally be over. However, he warned investors to be watchful of their preferences. Notably, the past few weeks have seen different acquisitions among software companies. Early this week, tax compliance automation firm Avalara (NYSE: AVLR) announced an agreement to be acquired by Vista Equity Partners. The software company said the deal is for $8.4 billion, and shareholders will receive $93.50 per share in cash. Additionally, Unity Software revealed plans to buy advertising technology company IronSource.