CNBC’s Jim Cramer cautioned investors that Monday’s stock market rebound, sparked by optimism over a potential end to the U.S.-Iran war, might be short-lived.
The market staged a dramatic comeback after President Trump on Monday said that the U.S. would halt attacks against Iran’s power plants and energy infrastructure. But the “Mad Money” host said the rally “reeked of fear” and won’t last unless the Iranian regime’s behavior backs up Trump’s claims.
The S&P 500 and Nasdaq Composite gained 1.15% and 1.38%, respectively, Monday, on hopes that the Middle East conflict that spiked oil and heightened recession worries could be coming to a close. Brent, the international benchmark, tumbled 10.9% after a weeks-long ascent on supply disruption concerns in the energy-rich region.
“By the end of the day … it felt like the whole rally reeked of fear, fear by those who are underinvested and better take down some stock because they don’t want the market to take off without them,” Cramer said. “Fear of the shorts that their precious year, made during the month of March, may go away with a real peace agreement.”
Cramer’s comments come as the Iran war enters its fourth week, with conflict escalating in recent days after an ultimatum from the president. On Saturday, he threatened an attack on more Iranian energy plants if the Strait of Hormuz wasn’t reopened in 48 hours.
Cramer added that it will be difficult to sustain Monday’s rally if Iran’s actions don’t back Trump’s comments. And so far, there have been some conflicting signs about what’s next.
Trump said on Monday that the U.S. and Iran wanted to “make a deal” and that the two countries have had “productive conversations” to resolve the conflict. Iranian state media, however, reportedly refuted the president’s claims hours later.
Cramer used an election as a metaphor for Monday’s volatile trading session. He described the traders of different asset classes as the “voters” who are betting on the outcome of the war. Cramer said that, “the bulls carried the popular vote,” adding that “somehow, unless Iran does nothing, no missiles, no drones, I expect a recount tomorrow.”
