CNBC’s Jim Cramer said Monday that several elements could help boost stocks, even during what could be an ugly earnings season.
A new earnings season starts on Tuesday with some of the biggest companies in technology, retail and consumer goods. Companies like Microsoft, IBM and Service Now is due to report its quarterly financial results this week.
Here are the six factors that can help stocks when companies report earnings, according to Cramer:
- Several companies carry out layoffs. Companies included Microsoft, Salesforce and Wayfair recently announced job cuts, and their stock jumped.
- The US dollar and interest rates peaked last autumn. Cyclical, more economically sensitive stocks have since jumped, as many companies do much of their business overseas.
- The Federal Reserve may be almost done raising interest rates. That’s according to a Wall Street Journal report, and could mean bad loan worries — and possible subsequent damage to banks — could be over.
- China’s economy is opening up again. The return to the world’s second largest economy is good news for companies, especially those in entertainment, travel and consumer goods.
- The government is ready to spend a lot of money on infrastructure. Cash from the bipartisan infrastructure bill and the Inflation Reduction Act provides a “safety net” for companies that build roads, bridges or tunnels.
- Analysts upgrade chip stocks. Barclays on Monday upgraded Advanced Micro Devices and Qualcomm to overweight. “Remember that [semiconductor chips] The abundance of inventory included everything from cell phones to desktop computers to high-performance computers. This is a very big deal,” Cramer said.
Cramer cautioned that while the earnings season is still not smooth sailing, any dips in the share price are not necessarily unwelcome.
“At the moment of the first print, when we see the numbers, I still expect to see some horrible declines. The difference from 2022? Those declines might be buyable,” he said.
Disclaimer: Cramer’s Charitable Trust owns shares of Advanced Micro Devices, Qualcomm, Salesforce and Microsoft.