TBEN’s Jim Cramer said Monday that several elements could help propel stocks higher even during what could be an ugly earnings season.
Tuesday kicks off a new earnings season with some of the biggest tech, retail and consumer goods companies. Companies like Microsoft, IBM and Serve now come out with their quarterly financial results this week.
Here are the six factors Cramer says could help stocks as companies report their earnings:
- More companies are making layoffs. Companies eg Microsoft, Sales team and wayfair recently announced staff cuts, and their stocks exploded.
- Last fall, the US dollar and interest rates peaked. Cyclical, more economically sensitive stocks have since rebounded as many companies conduct much of their business abroad.
- The Federal Reserve is about to raise interest rates. That’s according to a report from the Wall Street Journal, and could mean that worries about bad loans — and the potential resulting damage to banks — could be over.
- The Chinese economy is reopening. The return of the world’s second largest economy is great news for companies, especially those in entertainment, travel and consumer goods.
- The government is ready to spend a lot of money on infrastructure. Cash from the bipartisan infrastructure act and the Inflation Reduction Act provide a “safety net” for companies building roads, bridges or tunnels.
- Analysts are upgrading chip stocks. Barclays upgraded on Monday Advanced micro devices and Qualcomm to overweight. “Remember the [semiconductor chips] inventory abundance included everything from mobile phones to desktops to powerful computers. This is a very big problem,” said Cramer.
Cramer cautioned that while earnings season is still not smooth sailing, any declines in stock prices are not necessarily unwelcome.
“At the time of first printing, when we see the numbers, I still expect some vitriolic declines. The difference from 2022? Those declines may be for sale,” he said.
Disclaimer: Cramer’s Charitable Trust owns stock in Advanced Micro Devices, Qualcomm, Salesforce and Microsoft.