According to CNBC’s Jim Cramer, too many risky stocks helped the market rebound from last week’s selloff.
“I don’t like a day like today because speculative stocks make for bad leadership,” he said. “It’s much more encouraging when the most tested take the lead, even if the most tested means the Magnificent Seven and their traveling companions.”
The indexes recouped some of their losses after Friday’s rout – where $2 trillion in market value disappeared after President Donald Trump posted a message on his Truth Social platform threatening to raise tariffs with China, saying the country was “getting very hostile” with the rest of the world. After Friday’s close, Trump announced that the United States would impose additional 100% tariffs on Chinese goods.
But stocks jumped during Monday’s session after Trump said trade relations with China would “go well,” which appeared to assuage Wall Street’s concerns about the president’s tariff measures.
THE Dow Jones Industrial Average added 1.29%, equivalent to 67% of its Friday loss, while the S&P500 gained 1.56%, resuming 56% of its previous decline. THE Nasdaq Composite jumped 2.21%, with technology stocks largely dominating the market rebound.
Broadcom helped lead the pack after announcing a big deal with OpenAI, Cramer said. But beyond the direct theme of artificial intelligence data centers, Monday’s biggest winners were “some of the more speculative stocks,” he said.
Cramer referenced his concern that too many speculative names are seeing huge gains and creating froth in the market, particularly in the nuclear energy and quantum computing sectors.
Speculative stocks can be volatile investments because their stock prices rise quickly even if they make little or no profit.
He cited several speculative names whose shares jumped Monday, including Flowering Energy, Oklo, Monolithic electrical systems, NuScale Power, Computers Rigetti And Quantum D-Wave.
“As great as today’s rally was, the market hasn’t fully rebounded, not at all,” he said. “And the stocks that came back strong were the most speculative, the names that worry me the most.”
