February jobs report may cause ‘tsunami of selling’

CNBC’s Jim Cramer said he was encouraged by the trading activity he saw in technology and growth stocks as the market continued to grapple with fears that inflation would rise on Friday.

However, he cautioned that investors should be prepared for how the market might react to the February work report due to be released late next week.

“If we’re getting any strength here at all, please be prepared for another tsunami of selling as interest rates rise and stocks fall,” said the Mad Money host, predicting that a major interest rate move would be in the bond market would shoot. “Without ugly numbers, growth stocks are in trouble.”

Cramer commented after the market closed lower for the second straight week as the bond sale shifted into stocks.

The Dow Jones Industrial Average fell nearly 470 points on Friday, falling 1.5% to 30,932.37. The index also ended the week down 1.78%.

The S&P 500 fell 0.48% to 3,811.15, down 2.45% this week.

Despite rising 0.56% on the day, the tech-heavy Nasdaq Composite suffered the most this week after falling nearly 5% to 13,192,345. Friday’s surge was due to a rebound in big tech stocks.

“I don’t know if the growth names can withstand the pain, but today’s meeting gave us a glimmer of hope that they can still make some gains amid an inflation scare,” said Cramer. “If you don’t like the pain … you might want to take advantage of moments like this on the Nasdaq and take profits and prepare for a Friday swoon and be ready to buy stocks like Costco.”

The US Treasury’s 10-year return, a key metric in consumer credit interest rates, fell nearly 1.4% on Friday after surpassing 1.6% the previous day for the first time in about a year. The increase was due to the sale of bonds.

When rates fall, major industrials will lose momentum, as the Dow’s fall shows, but cloud, semiconductor and cybersecurity stocks have been positive, Cramer said.

Bond investors who cut their holdings are betting that the Federal Reserve could change their minds and raise the policy rate from near zero when the economy recovers from the pandemic-sparked recession, he added.

“Inflation is a nightmare for people who own bonds. Who wants a piece of paper that pays 1.5% if inflation could break 2%? They lose every day,” Cramer said. “That’s why these people dumped bonds and their wholesale sales always crash the stock market.”

Cramer announced his schedule for the coming week. The forecasts for earnings per share are based on FactSet estimates:

Monday: Zoom video, lemonade

Zoom video

  • Q4 2021 Results publication: After Market; Conference call: 5 p.m.
  • Projected EPS: 81 cents
  • Estimated revenue: $ 910 million

lemonade

  • Q4 publication of results: After Market; Conference call: 8 a.m.
  • Estimated losses per share: 64 cents
  • Estimated Revenue: $ 19.2 million

Tuesday: Destination, Nordstrom

target

  • Q4 publication of results: before the market; Conference call: 9 a.m.
  • Projected earnings per share: $ 2.54
  • Estimated revenue: $ 27.4 billion

Nordstrom

  • Q4 publication of results: After Market; Conference call: 4:45 p.m.
  • Projected EPS: 14 cents
  • Estimated Revenue: $ 3.58 billion

Wednesday: Dollar Tree, Wendy’s, American Eagle Outfitters

Money tree

  • Q4 publication of results: before the market; Conference call: 9 a.m.
  • Projected earnings per share: $ 2.12
  • Estimated Revenue: $ 6.8 billion

Wendy’s

  • Q4 publication of results: before the market; Conference call: 8:30 a.m.
  • Projected EPS: 18 cents
  • Estimated revenue: $ 477 million

American Eagle Outfitter

  • Publication of results for the fourth quarter: 4:15 pm; Conference call: 4:30 p.m.
  • Projected EPS: 36 cents
  • Estimated Revenue: $ 1.28 billion

Snowflake

  • Q4 publication of results: After Market; Conference call: 5 p.m.
  • Estimated losses per share: 16 cents
  • Estimated Revenue: $ 332 million

Thursday: Kroger, Costco

Kroger

  • Q4 publication of results: before the market; Conference call: 10 a.m.
  • Projected EPS: 69 cents
  • Estimated Revenue: $ 30.86 billion

Costco

  • Earnings release for the 2nd quarter 2021: 4:15 p.m. Conference call: 5 p.m.
  • Projected earnings per share: $ 2.44
  • Estimated Revenue: $ 43.72 billion

Disclosure: Cramer’s charitable foundation owns shares in Costco.

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Correction: This article has been updated to accurately reflect that projected revenue for Zoom Video is $ 910 million and projected revenue for Lemonade is $ 19.2 million. An earlier version of this story gave both of them an incorrect projection.

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