Hedge funds picking ‘fresh’ stocks led Thursday’s rally
CNBC’s Jim Cramer said Thursday’s rally was driven by hedge fund managers’ desire for new stocks rather than confidence winners and that investors shouldn’t overthink the currently choppy market.
“Traders wanted something new — not Archer-Daniels-Midland or Exxon, but AMD and Estee Lauder,” the “Mad Money” host said. “Hedge funds are in charge here, that’s how you get today’s uptrend. Please never try to overthink what’s going on in some of these rallies,” he added.
The Dow Jones Industrial Average gained 1% on Thursday, while the S&P 500 rose 1.4%. The Nasdaq Composite rose 1.9%. Markets have been swinging up and down in recent days after last week’s monster rallies, with the S&P 500 and Nasdaq on track to end the week higher.
Cramer said Thursday’s rally illustrates hedge fund traders’ penchant for buying “things that seem fresh and new” after they tire of obvious winners.
“That’s the real mindset right now,” he said. “That’s how it works, that’s how hedge funds think, and hedge funds seem to be the only players in the game right now. … I don’t see a lot of institutional interest in stocks right now. .”
Examples of such new stocks are Nvidia and Intel, which led the day’s rebound in semiconductor stocks, Cramer said. Nvidia stock rose 9.8%, its best day since November, while Intel posted its biggest one-day gain in more than a year with a 6.94% increase.
Other stocks traders were looking for included “how much lower can stocks go down,” Cramer said, citing DocuSign as an example. The company’s stock price rose 4.37% on Thursday to $104.55, but remains well below its 52-week high of $314.76.
Cramer added that investors should not let fears over the Russian-Ukrainian war control their investment decisions, especially when it comes to buying stocks.
“Shouldn’t we be more worried about Ukraine? Yes. Does it make sense to buy something here with Ukraine hanging over our heads? Well, maybe,” he said. he declares.
Disclosure: Cramer’s Charitable Trust owns shares of AMD and Nvidia.