Jim Cramer said the U.S.-China deal to cut tariffs is “amazing” for stocks, but he isn’t chasing Monday’s rally on the news. “I wouldn’t want to buy the open because it is so indiscriminate,” Jim said Monday on “Squawk on the Street,” warning that once selling pressure re-emerges, even strong companies could be hit hard. “When sellers start coming in and hitting the Googles of the world … maybe it’s not a great [market].” To be fair, Cramer usually cautions investors from chasing big single-session rallies like Monday’s. Instead, he recommends selling stocks when the market is looking overheated, and buying stocks when it looks unnecessarily weak. Rallies are a moment when raising cash is essential, but spending it is prohibited , he said. Stocks opened with a strong rally Monday after the U.S. and China made “substantial progress” in their trade discussions, according to Treasury Secretary Scott Bessent. The S & P 500 and Nasdaq jumped sharply, 2.6% and 3.5%, respectively while the Dow Jones Industrial Average popped 2.3%. Big Tech companies in particular, including Nvidia , Amazon and Apple , all saw strong gains in midday trading. The weekend’s negotiations between U.S. and China trade officials showed a shared committed to de-escalate trade tensions. The U.S. will temporarily cut the steep tariffs on Chinese goods to 30% from 145%, while China will reduce tariffs on American goods to 10% from 125%. This agreement will last for 90 days as the two countries work on a larger deal. The pause gave investors confidence that the world’s two largest economies may not have a prolonged trade war that will weigh on stocks of companies that do business with and in China. The expectation that trade flows will be restored also suggests that the risk of a U.S. recession is lower. But the agreement is only for 90 days, so investors will still need to closely monitor the trade talks to ensure a longer-term deal is reached. For example, Jim cited Stanley Black & Decker and Best Buy — two stocks the Investing Club exited earlier this year after our prior confidence in them waned. Shares of the industrial tool manufacturer and the electronics retailer are up 14.6% and 5.2%, respectively, Monday. Even with the temporary relief rally, which was still far below our exit prices, Jim said these companies are not out of the woods just yet, in part because the last few weeks could’ve been disruptive for orders. “They’ve got real tariff problems even [at] 30%,” Jim said. “And who knows who ordered what?” “We have a lot of stocks that actually are cheap, including many of the stocks we own” that have room to go higher, Jim said during Monday’s Morning Meeting . But it’s best not to get swept up in Monday’s excitement and add to those positions until there’s more clarity. (Jim Cramer’s Charitable Trust is long NVDA, AMZN, AAPL, LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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Jim Cramer on the set of “Mad Money” at the NYSE.
Bryan Bedder | CNBC
Jim Cramer said the U.S.-China deal to cut tariffs is “amazing” for stocks, but he isn’t chasing Monday’s rally on the news.
