Jim Cramer says to stay focused on earnings reports after Wednesday’s stock rally

CNBC’s Jim Cramer examined Wednesday’s market action and emphasized the importance of a focus on corporate earnings and commentary from management.

“The people who chatter endlessly about interest rates, they are not your friend. They can shake anyone’s confidence,” he said. “Instead, you’ve got to keep your eye on the prize: How management’s doing, the profits they’re ringing up, and the belief that you can spend money to make money.”

Stocks roared on Wednesday as Wall Street celebrated a fairly sedate consumer price index report and knockout earnings from major banks. The Dow Jones Industrial Average surged 1.65%, while the S&P 500 jumped 1.83% and the Nasdaq Composite climbed 2.45%.

Cramer suggested that for months, most investors fixated on the Federal Reserve and macro aspects of the economy, writing off the autonomy of good businesses and their ability to make money even in a less-than-ideal environment. As long as the Fed generally wants to lower rates, he said, things will be fine.

According to Cramer, it’s wise to “respect strong profits, as they turn into higher stock prices.”He also attributed some of the market’s success over the last few years to the strength of Big Tech stocks, rather than President Joe Biden’s administration. He pointed out that President-elect Donald Trump seems more favorable towards corporate leaders, adding that he feels CEOs, including bank leaders that just posted earnings, are optimistic about the future. Cramer said Americans could also develop a more positive economic outlook if the country can roll back or beat inflation.

“All of the big gains for the market happen on a handful of days around here,” he said. “This was one of those days, and I sure hope you got a piece of it.”

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