Shares trade with reopening optimism, but risks remain

The stock market is resting on reopening optimism, causing technology stocks to fall and cyclical stocks to rise in Tuesday’s session, CNBC’s Jim Cramer said.

While key averages were lower, Cramer said the action is defined by a decline in steady entrepreneurs and an increase in sporadic progress.

“It’s about optimism, people. Investors are voting with their feet,” the ‘Mad Money’ host said. “They are abandoning these secular growth stories, the shares of companies that are doing well, whether the economy gets hot or cold. Instead, they are finding their way to shares of companies that only make a lot of money when the business is thriving.”

The remarks come after the overall market withdrew from the gains made on Monday, which followed a tough sell-off last week. The Dow Jones Industrial Average fell 144 points to 31,391.52 on Tuesday, down 0.46%. The S&P 500 retreated 0.81% to 3,870.29. The technically heavy Nasdaq Composite fell 1.7% to 13,358.79.

S&P sector indices also traded lower during the session, with the exception of material. The technical parts of the market and consumer discretion showed the most difficulty, with both indices joining the Nasdaq by more than 1%.

Cramer said the market activity reflects investors betting on the chances that citizens could soon drop their Covid-19 protective masks, and states could soon drop coronavirus restrictions and restore the economy to normal, thanks to the country’s progress on the vaccine front. Yet there remains a tug of war between those who are optimistic and those who are cautious, he added.

Governors of Texas and Mississippi earlier Tuesday announced plans to remove masked mandates and all restrictions on business operations in their states.

“They bet we can tear off our masks soon and go back to normal, and that’s now the core of this market,” Cramer said. “Right now, the people who think our long national nightmares are coming to an end are the ones who are winning.”

However, he warned that the moment in the market is still vulnerable to risks. Cramer said that the country could reopen too quickly and that variants of the virus, such as the strain that was first discovered in South Africa, could lead to another increase in the country if the country failed.

While President Joe Biden expects to stimulate a $ 1.9 billion stimulus spending package that will move through Congress later this month, any problem pushed by the Senate could have an impact on the market.

“There’s still a lot that can go wrong,” Cramer said.