Stocks have recently retreated as Treasury yields continue to rise. To navigate this market turbulence, CNBC’s Jim Cramer offers some promising insights.
“We’re in an unusual situation, but skyrocketing bond yields are bad news for the vast bulk of the market. The mega-cap techs are the one big exception. You want to make it through this difficult moment?” he asked in a recent “Mad Money” segment. “You need the Magnificent Seven, and then the rest.”
By Magnificent Seven, Cramer means seven mega-cap companies: Apple Inc. (NASDAQ:AAPL), Microsoft Corp. (NASDAQ:MSFT), Amazon.com Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOGL), Nvidia Corp. (NASDAQ:NVDA), Tesla Inc. (NASDAQ:TSLA) and Meta Platforms Inc. (NASDAQ:META).
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These companies have been pivotal in propelling U.S. stock market gains this year. But recently, that momentum appears to be pausing.
For instance, Apple shares have declined by 7.8% over the past month, while Amazon and Nvidia are both down by over 8% during the same period.
But Cramer still likes the group.
“Think about who in the modern age has an indispensable product? How about seven of them? I got them,” he said.
Besides having products that are widely adopted, these companies also stand out to Cramer because of their strong cash positions.
‘Making Money On Their Money’
Some of these tech giants have been accumulating cash for years. And according to the “Mad Money” host, now is the time these cash reserves begin to show serious returns.
“We used to look at their gigantic cash positions and their cash management attempts to try to bring in a little extra income as just a kind of waste of time, an abstraction,” Cramer said. “Now they’re huge winners, and I think you’ll begin to see a line item in their quarters, the money they make off their cash, that could finally offset some of their miserable losses from that darn strong dollar.”
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He pointed to Apple as an example.
According to Apple’s latest earnings report, the company’s cash, cash equivalents and marketable securities totaled $166.5 billion as of July 1.
“I always felt…
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