CNBC’s Jim Cramer said Monday that several elements could help propel stocks higher, even during what could be a poor earnings season.
Tuesday kicks off a new earnings season featuring some of the biggest companies in technology, retail and consumer goods. Companies like Microsoft, IBM and ServiceNow are expected to release their quarterly financial results this week.
Here are the six factors that could help stocks as companies report earnings, according to Cramer:
- More and more companies are making layoffs. Companies including Microsoft, Selling power and Wayfair have recently announced workforce reductions and their inventories have increased.
- The US dollar and interest rates peaked last fall. Cyclical stocks, which are more sensitive to the economy, have since rebounded as many companies conduct much of their business overseas.
- The Federal Reserve would have almost finished raising interest rates. That’s according to a Wall Street Journal report, and it could mean the worries of bad loans – and the possible resulting damage to banks – could be over.
- The Chinese economy is reopening. The return of the world’s second largest economy is great news for businesses, especially those in entertainment, travel and consumer goods.
- The government is preparing to spend a lot on infrastructure. Funds from the bipartisan Infrastructure Bill and the Cut Inflation Act provide a “safety net” for companies building roads, bridges or tunnels.
- Analysts improve chip stocks. Barclays upgraded on Monday Advanced micro-systems and Qualcomm overweight. “Remember the [semiconductor chips] the inventory glut included everything from cell phones to desktop computers to high-performance computers. It’s very important,” Cramer said.
Cramer warned that while earnings season doesn’t always go smoothly, any decline in stock prices isn’t necessarily undesirable.
“At first impression, when we see the numbers, I still expect to see some vicious declines. The difference from 2022? Those declines, they could be buyable,” he said.
Disclaimer: Cramer’s Charitable Trust owns shares of Advanced Micro Devices, Qualcomm, Salesforce and Microsoft.