- CNBC’s Jim Cramer attributed the stock market’s weakness to increasing competition from U.S. Treasury bonds.
- He suggested that investors take advantage of this market weakness and buy stocks that can perform well even in a higher yield environment.
CNBC’s Jim Cramer said on Tuesday that investors should view the stock market’s recent weakness as a buying opportunity despite increasing competition from U.S. Treasury bonds.
Treasury yields have risen this month, with the yield on the benchmark 10-year note rising to 4.566% on Tuesday, a new 15-year high. The 30-year government bond also reached a yield of 4.7% on Tuesday, a level not seen since 2011. The S&P 500 has fallen 5.2% so far in September, while the tech-heavy Nasdaq has lost nearly 7%.
While the additional rise in yields pressured stocks in September, Cramer argued that interest rates will peak at some point after the Federal Reserve curbs inflation. That “means you have to buy some stocks here, not sell them,” Cramer said.
“Just don’t do everything at once. Do it on a scale. Some here. Some lower. Because if Treasury yields actually rise to those levels, you want to have enough cash left over to buy more stocks,” he continued.
Cramer recommended investors look for companies that can perform well and generate profits even in a higher interest rate environment. For Cramer, investors should look for companies like his long-time favorite Nvidia and say, “I don’t want to find any more 10-year companies. I want to find more Nvidias for you.”
“You buy stocks if you want to get rich; you buy government bonds to stay rich,” Cramer said. “I think a mix of both is fine, but if you’re betting on bonds now, I think you’re probably missing out on something really good in stocks, even if that seems completely impossible. It always seems that way. It never is.” “
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia.