CNBC’s Jim Cramer said on Monday that several elements could help the stock move higher, despite what could be a bad earnings season.
Tuesday kicks off a new earnings season featuring some of the biggest companies in technology, retail and consumer goods. A rich company Microsoft, IBM and ServiceNow is scheduled to report quarterly financial results this week.
Here are six factors that could help stocks when companies report earnings, according to Cramer:
- More and more companies are implementing layoffs. Companies included Microsoft, Salesforce and Wayfair recently announced to cut the head count, and the stock is rising.
- The US dollar and interest rates peaked last fall. Cyclical stocks, more sensitive to the economy began to bounce, as many companies do a large part of their business abroad.
- The Federal Reserve is almost certain to raise interest rates. That’s according to a report by the Wall Street Journal, and it could mean that the worry about bad loans – and the potential damage to banks – could end.
- China’s economy is reopening. The recovery of the world’s second largest economy is good news for companies, especially in entertainment, travel and consumer goods.
- The government is ready to spend big on infrastructure. Cash from the bipartisan infrastructure bill and the Inflation Reduction Act provides a “safety net” for companies building roads, bridges or tunnels.
- Analysts upgrade chip stocks. Barclays has an update Advanced Micro Devices and Qualcomm for overweight. “Remember, that’s it [semiconductor chips] The inventory glut includes everything from cell phones to desktops to high-performance computers. This is a big deal,” Cramer said.
Cramer cautioned that while the earnings season is still not going well, falling stock prices aren’t necessarily unexpected.
“At the moment of the first print, when we see the numbers, I still hope to see some violent rejection. The difference from 2022? Those who refuse, they can buy,” he said.
Disclaimer: Cramer’s Charitable Trust owns shares of Advanced Micro Devices, Qualcomm, Salesforce and Microsoft.
