CNBC’s Jim Cramer reviewed Tuesday’s pullback, saying the market was due for some declines, and investors are perhaps interpreting companies’ quarters with more scrutiny than they had during the preceding eight-day rally.
“We’re getting back to reality, where good is good and bad is bad and never the twain shall meet,” he said. “In short, the market’s rational again.”
The Dow Jones Industrial Average dropped 0.15% while the S&P 500 slid 0.2%, and the Nasdaq Composite dipped 0.33% by close. The S&P 500 would have posted its longest winning streak since 2004 if it had finished the day up.
Cramer suggested that there was an “odd pattern” occurring during the rally where many companies saw shares jump after reporting whether the quarter was better than expected, better than feared or even bad — with Wall Street assuming business would improve once the Federal Reserve issued rate cuts.
For example, he said Lowe’s on Tuesday reported a similar quarter to peer Home Depot, which reported during the market’s winning streak. Both retail home improvement companies discussed uncertain consumer demand, with Home Depot saying it expects increased comparable sales declines towards the end of the year, and Lowe’s cutting its full-year outlook. Cramer noted that the former managed to rally while Lowe’s shares dipped. To him, these results mean the market is “back to business as usual,” and many stocks won’t get the benefit of the doubt.
But Cramer stressed that even though the indices notched losses, the decline was not severe or worryingly dramatic.
“Now the good news is that these are all subtle. There was no head bashing here,” he said. “We’re not having one of those roaring openings and then a pirouette down that takes your breath away and causes people to run for the hills.”
