Too many risky stocks helped the market bounce back from last week’s sell-off, according to CNBC’s Jim Cramer.
“I don’t love a day like today because the speculative stocks make for bad leadership,” he said. “It’s much more encouraging when the tried and true do the leading, even if the tried and true means the Magnificent Seven and their fellow travelers.”
The indexes recouped some of their losses from Friday’s rout — where $2 trillion in market value disappeared after President Donald Trump made a post on his Truth Social platform threatening to raise tariffs with China, saying the country was “becoming very hostile” with the rest of the world. After Friday’s close, Trump announced the U.S. would impose an additional 100% tariff on Chinese goods.
But stocks surged during Monday’s session after Trump posted that trade relations with China “will all be fine,” which seemed to soothe Wall Street’s worries about the president’s tariff measures.
The Dow Jones Industrial Average added 1.29%, which equates to 67% of its Friday loss, while the S&P 500 gained 1.56%, taking back 56% of its previous decline. The Nasdaq Composite popped 2.21% as tech stocks largely dominated market rebound.
Broadcom helped lead the pack after it announced a big deal with OpenAI, Cramer said. But away from the direct artificial intelligence data center theme, Monday’s biggest winners were “some of the most speculative stocks out there,” he said.
Cramer referenced his fear that too many speculative names are seeing enormous gains and creating market froth — especially in the nuclear power and quantum computing sectors.
Speculative stocks can be volatile investments, as their share prices climb quickly even though they have little, if any, profits.
He named several speculative names that whose stocks popped on Monday, including Bloom Energy, Oklo, Monolithic Power Systems, NuScale Power, Rigetti Computing and D-Wave Quantum.
“As tremendous as today’s rally was, the market didn’t come all the way back, not nearly,” he said. “And the stocks that did come roaring back were the most speculative ones, the names that I’m most worried about.”
