Today was a big gain for the stock market, and investors should be happy about it, Jim Cramer said Wednesday to his Mad Money viewers. After months of bullish commentary on the economy, Jay Powell, chairman of the Federal Reserve, expressed abruptness and changed his mind about the pace of interest rate hikes.
Cramer has been saying for weeks that the Fed is feeling the economy wrong, not taking into account the slowdown in the housing, automotive, oil and retail industries. Today, however, Powell's actions are in line with Cramer's "one-and-wait" interest rate policy – another rate hike, then a break to assess economic data ̵
Equities were able to move from bearish to bullish jumps, Cramer said, with Salesforce.com (CRM) leading the way with 10.2% taking the remaining FANG stock. Amazon (AMZN) closed down 6% and Apple (AAPL) ended the day down 3.8%. Other economically sensitive stocks such as transportation and industry also rebounded, which should happen in a bull market.
Cramer warns not yet out of the woods, warned Cramer, as tariffs and trade will still dominate the headlines and trade It is likely that President Trump will raise Chinese tariffs from 10% to 25% if no agreement is reached can be.
From today, however, investors are no longer battling the Fed. Powell has proven to be a flexible leader, Cramer concluded, and we should all celebrate victory.
Cramer says the Fed should end its funding for non-banks now. More information is available with a free trial subscription for real money.
Which stocks can hold?
Can technical stocks form a sustainable rally? Cramer said it depends on the stock. In the case of DXC technology (DXC), the answer is probably "no".
DXC was formed almost two years ago, after old Hewlett-Packard replaced its IT consulting business with DXC shares of Computer Sciences Corp. rose 59% in the first 18 months, but fell from $ 96 to just $ 62 per share in the last two months.
At the beginning, DXC cut its costs by cutting costs. Later, the company sought to ignite growth by splitting the weaker public business as Perspecta (PRSP). As revenue continued to decline, investors began to fear that cutting costs could affect DXC's ability to gain new business.
Yesterday, DXC received an analyst upgrade, addressing the company's favorable valuation. However, Cramer reminded viewers that stocks are not cheap when profits go down. He said the stock could see a short-term upturn as the overall market recovers, but in the long term, tech investors want growth that DXC simply does not have.
Executive Decision: Qualcomm
For his decision-making segment, Cramer spoke with Steve Mollenkopf, CEO of Qualcomm (QCOM), a stock that was 25% below its September highs. The stock return is currently 4.4%.
Mollenkopf said the upcoming 5G revolution would begin next year and mobile operators would be able to offer ten times the speed of 4G services for only 1/30 of the price. This means that any company that has equipment connected to the Internet can benefit from it.
The introduction of 5G will begin in the US and South Korea in the spring, said Mollenkopf, Europe from the middle of the year and China in the second half of the year the year. There is a lot to do worldwide to prepare for this rollout.
Mollenkopf added that the US is in a strong position to lead the world in 5G, but governments around the world are interested in the huge opportunities this offers
When he said after updating on Qualcomm's continued Mollenkopf said that both companies would continue to work towards a solution.
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Linde and Praxair
Investors looking for winners in an uncertain environment need all the help they need. Fortunately, our government is happy that more and more companies are merging with their competition.
Nothing is better for a company than being part of an absolutely legal oligopoly, Cramer told the audience. That's why he's a fan of industrial gas supplier Linde (LIN), who just received approval to acquire Praxair (PX). The merger gives Linde a market share of 32%, as the US will only have three main players.
We have already seen this pattern in the airlines. In recent years, air traffic has been very competitive and airlines are going out of business like clockwork. Then, the government approved a number of airline mergers, controlling 70% of all domestic flights from just four remaining airlines. In fact, many flights now have no competition at all.
The same goes for bottles and cans that Ball Corp (BLL) was able to devour its competitors, resulting in a duopoly. Ball's shares rose 31% for the year.
As for Linde, Cramer says, the company earns many times its 20x profit, and he believes the stock is only rising higher.
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