Jim Cramer explains why money was flowing back into Big Tech

CNBC’s Jim Cramer analyzed the market move on Tuesday and explained why some Big Tech favorites posted gains while other stocks faltered. He said investors were worried about the broader economic impact of rising bond yields.

“Big Tech has made a big comeback today, driven by the bond market and not the stocks themselves,” he said. “So remember that the respite is only temporary, although you should still own some of the Magnificent Seven to diversify.”

Tuesday marked the second straight day of losses for the United States Dow Jones Industrial Averagewith the index posting its first consecutive loss since September. The S&P 500 also deeper closed, but more technology-heavy Nasdaq Composite recovered and closed with a gain of 0.18%.

Rising bond yields are prompting traders out of cyclical stocks and back into secular winners, which had led the market for much of the year and are not as reliant on the Federal Reserve’s interest rate cycle, Cramer said. Several recent earnings reports disappointed investors, he added, because they seemed inconsistent with “the more opportune moment” when the Fed is cutting interest rates but employment remains strong. He named weaker characters GE Aerospace, Kimberly Clark, Nucor, Original parts And PulteGroup. Now in stock Amazon, Meta, alphabet And Microsoft saw an upswing.

However, Cramer dismissed negative theses on some of the stocks that posted losses, saying some of the companies were fundamentally sound. He said stocks could rise again even after a day like Tuesday, when money managers are “scared of cyclicals and nervous about aerospace, scared of homebuilders, dumbfounded by auto parts and cooled by Kleenex sales.” “

“We’ve seen this movie before. It’s been running for more than a decade,” Cramer said. “Don’t worry, the money can go back to where it was just as quickly.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Amazon, Alphabet, Microsoft and Meta.