CNBC’s Jim Cramer said on Wednesday that inflation is peaking, which is good news for stocks that have been hammered in recent months.
“The stock market … saw peak inflation coming completely. I think you had to be deliberately obtuse to miss it because commodity prices have collapsed a while ago, but now it’s undeniable” , the “Mad Money” host said.
Stocks jumped on Wednesday after the consumer price index showed that the rise in inflation slowed in July from a year earlier. All major indexes rose, with the S&P 500 hitting its highest level since May and the Nasdaq Composite closing at its best level since April.
Cramer said the spike in inflation bodes well for investors looking to pick up shares in stocks they may have lost earlier in the year.
“Peak inflation is nirvana for stocks, especially underdog stocks like fast-growing tech plays or financials or consumer discretionary names,” he said. “That means you can shop everything from Microsoft to Wells Fargo to Target.”
And while that doesn’t mean the economy is out of the woods when it comes to entering a recession, peak inflation could help boost stocks even during an economic slowdown, according to Cramer.
“Some companies will be absolutely hurt by the next recession, but others will see their stocks rise because they are worth more in an environment where inflation is finally possibly under control,” he said.
Disclosure: Cramer’s Charitable Trust owns shares of Wells Fargo and Microsoft.