The market may be primed for the Dow to lead with the debt ceiling resolved, Jim Cramer says

CNBC’s Jim Cramer defined that final week’s debt ceiling decision may have paved the means for a Dow resurgence, though the index closed decrease by about 200 factors Monday.

“With the default fears off the desk, possibly this can be a market the place the once-mighty Dow can truly lead once more,“ Cramer stated.

He famous that the Dow carried out higher than the tech-heavy Nasdaq on Friday, handing over its second-best day of the yr. With the exception of Tesla, most of Cramer’s “Magnificent Seven” did not outperform on Friday like they’ve been doing up to now this yr.

“Friday’s rally was necessary, not simply because it was an enormous run, however due to its composition,” Cramer stated. “Even when the ‘Magnificent Seven’ take a breather after their super beneficial properties, it seems there are many different potential winners that would energy the subsequent leg of the market’s transfer greater.”

Although Cramer chalked up most of the Dow’s Friday success to the debt ceiling compromise, he additionally identified that nothing exists in a vacuum — the “Goldilocks” labor report may additionally be a consider final week’s Dow rally, in addition to China’s stimulus package, he stated. However, if not for the deal, the Federal Reserve may nonetheless be feeling stress to move steep hikes at their subsequent assembly, which might throw the market out of whack, Cramer added.

In a extra Dow-focused market, Cramer highlighted a number of shares that roared on Friday, together with know-how firm 3M and building producer Caterpillar.

After flying excessive on Friday, 3M was down greater than 4% at Monday’s shut. 3M is in the center of a cancer-causing “ceaselessly chemical” ground contamination lawsuit, which was postponed on Friday, probably to give each events extra time to attain a settlement. Cramer is optimistic the settlement is not going to bankrupt the firm, and that its inventory will carry out properly as soon as the litigation is over.

Cramer believes Caterpillar is basically misunderstood by Wall Street, with merchants treating it like an old style cyclical inventory. He famous that the firm has been efficiently diversified by CEO Jim Umpleby right into a enterprise that is much less reliant on the world financial system, though merchants saved the inventory working excessive on Friday, citing China’s stimulus plan. But that nation represents lower than 5% of the firm’s present enterprise.

“Now we simply want to determine which of those new winners actually does have endurance past simply Friday, however keep in mind,” Cramer stated, “please do not be grasping, the greatest cash on this leg of the bull market has already been made.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Caterpillar.