Stay-at-home stocks benefiting from the coronavirus pandemic pushed the stock market higher as investors continued to grapple with the surge in cases in dozens of states, CNBC’s Jim Cramer said Thursday.
“When the state of Texas was forced to pause its reopening plan due to record-breaking Covid infections … suddenly, the actions of staying home were back in vogue and filled the entire market,” said the host of ” Mad Money. ” “Many of today’s winners were the usual suspects benefiting from the pandemic.”
All of the leading averages advanced more than 1% during the session on a respite from a sell-off the day before.
As Covid-19 cases skyrocketed in the southern and western United States, Texas Governor Greg Abbott announced Thursday that he is pausing plans to reopen the state as officials fight to increase hospitalizations. Renewed concerns about the spread of the virus caused the market to fall out in the open, but the S&P 500 reversed course to end the day with a 1.10% rise to 3,083.76.
“The truth is, we’ve been through this before and we know that many stocks benefit from the resurgence in the economy of staying home,” Cramer said. “There are 100 companies on the Cramer Covid-19 Index … Altogether, the shares are now worth $ 12.2 billion. That’s a $ 11 billion increase when we put this list together in April. The entire S&P 500 is only worth $ 25.2 billion.” .
Oil stocks also contributed to the positive trading day as crude prices rebounded. The bank’s shares also rose, although the move appears to be short-lived, Cramer said.
The bank stocks jumped to the news that the Federal Deposit Insurance Commission would ease the guidelines set out in the Volcker Rule, a rule driven by the Great Recession that regulates how financial institutions invest in venture capital and other funds. However, that was later countered by new Federal Reserve restrictions that required big banks to suspend their share buyback programs and limit third-quarter dividend payments in an effort to prevent capital in numerous banks from falling to relatively low levels due to the impacts of the Federal Reserve. pandemic.
“Stay away from the banks,” said Cramer.
The Cramer Covid-19 index, populated with stocks that have benefited from the blockade, topped the top three averages on Thursday, gaining 1.5%.
As investors invested more money in pandemic plays, stocks like McCormick, Clorox, Etsy and Shopify were able to recover, Cramer said. Pantry, e-commerce, work-at-home and mega-cap technology stocks have been some of the biggest beneficiaries of coronavirus response measures.
With the economy still in a precarious position, Wall Street made progress due to federal action, the host said.
“In a normal environment, in which we let the economy happen, so to speak, the stock market would have collapsed today,” Cramer said. “But the Federal Reserve is determined to keep bankruptcies as low as possible.”
Disclosure: Cramer’s charitable trust owns McCormick shares.
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