The stock market just faced a challenging week, and CNBC’s Jim Cramer suggests that the struggles are far from over.
As few significant corporate earnings reports and economic data are set for next week, the inverse correlation between oil prices and stock performance will become even more relevant. It’s almost predictable now that stock values tend to decline as oil prices increase—a trend that has been noticeable since the recent military actions involving the U.S., Israel, and Iran.
Cramer remarked that President Trump seems to be shifting away from discussions about reducing military engagement in the Middle East, now labeling the situation as one that has taken on an “unbridled nature.” There are reports of thousands of troops being sent to the area.
The markets have been attentive to every update. During the last trading session, both the Dow Jones Industrial Average and the Nasdaq entered correction territory—a decline of at least 10% from recent highs. They finished significantly lower, yet still above that threshold. Comparatively, the S&P 500 fell as well, but it’s improved slightly, now showing a 7% drop from its peak. All three major indices have logged their fourth consecutive week of losses.
Brent crude, the global oil benchmark, climbed over 3% on Friday, reaching $112.19 per barrel, its highest since July 2022. It jumped an additional 8.8% over the week.
“It’s tricky to figure out how to handle stocks with these soaring oil prices, but letting go of shares in solid companies for something that could change with just a phone call doesn’t make much sense,” Cramer expressed on Friday night’s “Mad Money.” “However, if reopening the Strait of Hormuz is the goal, achieving that won’t be a walk in the park. It could demand either significant military escalation or a diplomatic breakthrough, and I find the latter less probable.”
“The uncertainty is quite high. We know wars typically hurt stock performance, and their global economic impact is profound. It feels like for every positive development, there are multiple negatives. Yet, every positive just seems to prevent a genuine rebound from taking shape,” he added.
Looking forward, Cramer focused on upcoming corporate earnings.
- KB Home is set to report its earnings on Tuesday. Cramer noted that this could provide insights into the struggling housing market, predicting “sales will be slow” this quarter due to high mortgage rates. He believes that rising energy costs contributing to inflation shouldn’t prompt the Federal Reserve to lower rates since the housing market remains weak and needs to recover to boost the economy.
- On Wednesday, uniform suppliers are expected to release quarterly results. Cintas and payroll service firm Paychex are both considered high-quality companies, yet their stocks have been underperforming. Cramer believes Cintas’ stock could rise following the expected mergers. As for Paychex, it faces pressure related to AI disruptions. “Long is now shadow boxing with shorts,” he said, hinting at uncertainty around who will prevail.
- Carnival is set to announce earnings on Friday. Cramer mentioned that Wall Street’s perspective on cruise lines appears to be shifting positively, even amidst weaker results. “Although the stock prices aren’t great due to rising fuel costs, Carnival is still viewed as a valuable vacation option, which feels increasingly rare these days,” he pointed out.
In summary, Cramer advised investors to approach a tough market as a chance for selective buying. “Some sectors, such as banking, retail, and parts of big tech, are beginning to see price declines. This presents a favorable opportunity to acquire quality stocks at more reasonable prices,” he concluded.
