Positive housing data and a price rebound “in some important stocks” fueled buying in the stock market Monday, CNBC’s Jim Cramer said.
“We had a lot of encouraging signs today, but keep in mind that this market loves veering from one extreme to the other,” the “Mad Money” host said.
The market clawed back much of its losses from Friday’s session when the major averages all plunged more than 2% as the blue-chip index shed 730 points against the backdrop of rising coronavirus cases in the American South and West. Stocks sold off as multiple states slowed down their reopening plans.
Texas, Florida, California and Washington halted their reopening plans as positive cases and hospitalizations have spiked. Though cases are decreasing in New Jersey, Gov. Phil Murphy on Monday postponed plans to allow indoor restaurant dining to resume Thursday, citing the spikes in other states after restaurants reopened.
“Friday felt like the end of the world; today it feels like we’re out of the woods. Tomorrow? Who the heck knows?” Cramer said.
Pending home sales set a record in May, shooting up about 44% as homebuyers reentered the market. The results helped the market reverse its negative trajectory Monday morning as the S&P bounced almost 2% off its low on the day. Investors also saw a bargain in Nike, whose stock fell almost 8% Friday coming off a poor showing in its fiscal fourth quarter, trading the stock up 2.35% on Monday, Cramer said.
Facebook stock has been reeling — dropping more than 8% on Friday — with a growing list of companies joining in an advertising boycott against the platform. A JPMorgan analyst, however, said in a Monday morning note that the boycott presents no “significant risk to numbers” outside of a near-term hit, Cramer pointed out. The stock rallied 2% to $220.64 during the session.
Additionally, Southwest caught a double upgrade from Goldman Sachs, which endorsed the airline as the best comeback opportunity, the host said. The market received another boost from Boeing‘s 737 Max progress, he added. Boeing shares spiked 14.40% on reports that the plane manufacturer would start a multiday certification test, backed by the U.S. Federal Aviation Administration, as the company attempts to return the top-selling aircraft to the sky after two fatal crashes killed hundreds of people within the past two years.
Investors continued to rotate to recovery plays on the market as bank stocks also rebounded from poor stress test results Thursday, Cramer said.
“The Cramer Covid index lagged today for a simple reason: If you believe this spike [in] infections simply isn’t an issue, well, you’d want to bail on the Covid stocks,” the host said. “I think that’s a bogus argument. Too many states are gradually shutting down again to write this off as no big deal.”
Disclosure: Cramer’s charitable trust owns shares of Facebook and Goldman Sachs.