Investors shouldn't let a barrage of bad news drive them out of the stock market, CNBC's Jim Cramer said Tuesday.
Stocks fell Tuesday after a hotter-than-expected inflation report fueled concerns about a bigger half-point Federal Reserve interest rate hike at next month's meeting. The Nasdaq dropped 0.74%, while the S&P 500 lost 0.38%, preventing the indexes from logging three-session win streaks following Thursday's postelection rout. The artificial intelligence trade was also under pressure as the Nvidia CEO scandal simmered and despite a bullish valuation bump on the Anthropic IPO.
"At times like this, where you have a bull market one day and a bear market the next and investors seem to have no conviction, you need to think not only what can go wrong, but also about what can go right," the "Mad Money" host said.
Tuesday's consumer price index, which exceeded estimates, sent Treasury yields higher. Dallas Fed President Lorie Logan suggested two quick quarter-point increases may be necessary. Only hours before the CPI print, Fed Governor Christopher Waller supported another quarter-point hike and left the door open to a half-point increase. The market is now fully pricing in a quarter-point rate hike at the central bank's December meeting, with a 12% probability of a half-point increase, according to the CME FedWatch tool.
Still, Cramer argued that an end to the Iran war could send oil prices sharply lower, easing inflation and reducing pressure on the Fed. "If we see oil plummet to $40, which is what the chart of oil refining giant Valero says to me, and you get Walmart and Costco to force price cuts for branded products or make their own excellent house brands for everything, then you are going to see the CPI come down," he said. Oil dipped under $90 per barrel for the first time since August on hopes for a Middle East detente.