CNBC’s Jim Cramer reviewed Tuesday’s market action and asserted that tech stocks are easier to own for the long term while bank stocks suffer as the market broadens and experiences “economic choppiness.”
“You simply can’t bank on the bank stocks right now, hence why the great broadening out is indeed fraught with risk,” he said. “Meanwhile, tech may be torturous to own on a day-to-day basis, but long-term it’s a cornucopia of rewards.”
The banking sector took a hit during Tuesday’s session after JPMorgan lowered guidance on net interest income and expenses at a conferencesending shares plunging and closing down more than 5%. JPMorgan President Daniel Pinto backtracked on estimates for next year, saying they are “not very reasonable” because the Federal Reserve is set to lower interest rates.
While JPMorgan weighed on the 30-stock Dow Jones Industrial Averagewhich shed 0.23%, the S&P 500 gained 0.45% and the Nasdaq Composite added 0.84% on the day. Big Tech players such as Nvidia, AMD and Microsoft closed higher even though the sector as a whole has struggled in recent weeks.
Cramer contrasted JPMorgan’s troubles with the success of Oraclewhich closed up more than 11% after the enterprise software company’s quarter beat expectations. He said many of these tech companies have lasting, secular themes, adding that any business related to data centers has “tremendous pin action.” Oracle, he said, is “arguably in control of its own destiny,” while banks are tied to the economy.
“The need for data centers and their construction will be with us for multiple years,” Cramer said. “They have nothing to do with what Jay Powell and his merry band of open marketeers decide at next week’s meeting. We don’t have to play an interest rate guessing game with tech because the Fed is tangential.”
JPMorgan and Oracle did not immediately respond to CNBC’s requests for comment.
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