Be Careful With FAANG Stocks As Expected Fed Rate Hikes Cause Market Pivot, Says Jim Cramer

CNBC’s Jim Cramer said on Thursday that he expects the market to pivot to a bull market for recession-proof stocks rather than expensive growth names.

When the Federal Reserve decides to fight an “inflationary spiral with [interest] rate, you’re not supposed to buy expensive growth stocks. The hedge fund playbook says you should sell stocks like Amazon until the tightening cycle is almost over,” the “Mad Money” host said.

“We have a new bull market in recession-proof names that can continue to post strong numbers even in the face of a downturn,” he added.

The Dow Jones Industrial Average gained 0.25% on Thursday while the S&P 500 rose 0.43%. The tech-heavy Nasdaq Composite rose 0.06%.

Cramer also said he thinks investors should generally avoid buying stocks of the biggest tech names in today’s market.

“I’m adamant that you have to be very conservative with FAANG names and the like,” Cramer said. “Of all these growth names, the only two I would put new money into” are Google’s parent Alphabet and Facebook’s parent Meta, because they’re cheap on next year’s revenue, he added.

FAANG is an acronym for Facebook, Amazon, Apple, Netflix and Google.

Cramer warned that a pivot to a bull market won’t happen right away.

“Pivots don’t happen in the blink of an eye, even though they do. This one is very difficult because for a long time the whole stock market bowed to FAANG and his friends,” Cramer said. . “It was a bull market for a handful of stocks, a bear market for hundreds, if not thousands more. Now the bear is turning into a bull, and most of that will happen over the next month. .”

Disclosure: Cramer’s Charitable Trust owns shares of Meta, Amazon, Apple and Alphabet.

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