Jim Cramer on how to approach growth stocks after inflation fears rocked the market

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TBEN’s Jim Cramer indicated that market participants had two ways of approaching high-end growth stocks which faltered and faltered in a volatile session on Wall Street on Tuesday.

Investors can choose to participate in the sale that has brought some tech names like Apple down into negative trading territory this year.

The other choice – building on Federal Reserve Chairman Jerome Powell’s reaffirmed commitment to keep interest rates low – is to hold on and consider charging worthy stocks to from their highs, Cramer said after the mixed market close.

“After today’s rebound in the late afternoon, it’s not too late to sell the more expensive stocks if you want to,” said the host of “Mad Money”. “But when it comes to the best growth stocks, down more than 10% from their highs, call me a buyer. Not at all at once, not big, but a buyer nonetheless in any. what a new test of that 9.47am low we saw today. “

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Cramer’s assessment of the current market state follows a roller coaster day of trading where major US averages have rebounded from their session lows. The market suffered a strong sell-off in the morning, with the Nasdaq Composite falling nearly 4% to its low, before the blue-chip Dow Jones and the benchmark S&P 500 managed to post modest gains at fence.

The Dow advanced more than 15 points to 31,537.35 for a gain of 0.05%. The S&P 500 finished up 0.13% to 3,881.37 to end their losing streak at five. The highly technological Nasdaq couldn’t muster enough for a positive day, falling 0.5% to 13,465.20, extending Monday’s losses.

“I’m glad to get the idea that you have to ring the ledger here, but I happen to like growth stocks in a reflation alert. I like growth stocks when the risk is triggered. J ‘likes growth stocks when risk is absent,’ said Cramer mentioned.

“If you want to hold the growth stocks … you have to be prepared to take a little pain, like in late 2015 and early 2016 – that was the last big time to buy these stocks – or you can just sell if you want and try to go back to a lower level, ”he added.

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The market faced a rotation as investors traded growth and tech stocks that have outperformed throughout the pandemic for value games from companies that are expected to see a return to activity when the market reopens. the economy. The Nasdaq is now 4.5% off its closing high earlier this month.

Fears that a pick-up in inflation could spur the Fed to raise interest rates, as it did twice in three months between 2015 and 2016, have pushed investors out of growth stocks in recent days , Cramer said. Higher rates pose a challenge to the growth and actions of public services.

Apple, Salesforce and ServiceNow stock prices have all fallen at least 3% this week.

In an appearance before Congress on Tuesday, however, Powell told lawmakers inflation remained “sluggish”, the job market faced ongoing challenges, and the central bank was committed to its current monetary policy.

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This reassured investors about interest rates, helping the market to recoup some losses.

“This time our Fed chief has promised not to raise rates – too many unemployed – but there will come a time and a time when these growth stocks will be somewhat desperate,” Cramer said. “They will look a bit like they were today … before people came to buy.”

Correction: This story has been updated to reflect the correct number of points by which Dow has advanced.

Disclosure The Cramer Charitable Trust owns shares of Apple and Salesforce.

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