Jim Cramer explores why consumer goods stocks are seeing losses

CNBC’s Jim Cramer reviewed Monday’s market action and gave his take on why a large swath of stocks are notching losses, focusing on bruised sectors like consumer goods.

“This is a market that rewards growth regardless of price,” he said. “So, people will pay up for tech growth, which is all about real demand and pricing power, and they’re avoiding companies that have lost pricing power and offer yields that are too low to compete with Treasurys. I don’t expect that dynamic to change any time soon.”

Cramer suggested that the power in tech stocks related to artificial intelligence and accelerated computing has shielded much of the market from casualties weathered by other sectors. On Monday, the indexes largely rebounded from a week of losses, with the S&P 500 climbing 0.55%, the Nasdaq Composite advancing 1.24% and the Dow Jones Industrial Average slipping 0.06%.

According to Cramer, typical safety stocks like Clorox, Procter & Gamble and Clorox are now fairly risky to own. The spike in long-term interest rates is one reason for these stocks’ decline, he said, saying they are vulnerable when bond yields climb higher. The strength of the dollar might also contribute to the issue, he added, noting that many consumer packaged goods names do a lot of business overseas. Pricing power is also hurting these companies, Cramer continued. He also said many retailers and their suppliers feel squeezed as companies like Amazon and Costco consistently offer very low prices.

Aside from consumer goods, Cramer pointed to notable weakness in other sectors including real estate, healthcare, housing, biotech, materials and food. And while he conceded that inflation remains persistent — as the Federal Reserve continues to bemoan — he encouraged investors to keep this underperformance in mind.

“All I can say is, maybe the Fed had better be careful for what it wishes for,” Cramer said. “Companies that represent a gigantic chunk of the real economy have seen their stocks swoon. Could their earnings be that far behind, and could inflation be running its course a lot faster than expected?”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Costco and Amazon.