Wall street should have been down on Tuesday, however, the stock market had a great run.
The usual suspects (tons of negative analyst notes, rising bond yields, mixed earnings, weak housing data and rising commodity prices) lined up against the market on Tuesday. Not to mention comments by Federal Reserve Bank of St. Louis President James Bullard a day before a Interest rate increase of 75 basis points could be a possibility at an upcoming policy meeting to accelerate the central bank’s fight against inflation.
“If all the usual suspects have alibis, what can explain today’s unexpected uptick,” CNBC’s Jim Cramer said Tuesday.bad money“I think we tend to underestimate our advantages,” he added.
Cramer listed three main reasons for what he called the “strange action” in the market.
- The market was oversold, making it difficult for stocks to plummet.
- Cramer recalled 1994 when the Fed doubled rates and stocks still rose. If history is any indicator, Bullard’s tough talk might not be so bad after all, he said.
- Another reason for the market’s resilience on Tuesday, according to Cramer, is that the US is in a better position than other countries, which points to the reopening of the US economy and reliable energy sources.
While it’s true that inflation is a problem, Cramer has an answer for that, too.
“We got higher flank steak prices, more expensive cornflakes and higher gas bills, but we also got much higher wages to ease the pain,” he said.