CNBC’s Jim Cramer explained Monday that he believes the Dow Jones Industrial Average will outperform the Nasdaq Composite and the S&P 500 next year.
“As we head into the end of the year, Wall Street tends to produce the biggest winners, which is why I expect the Dow to outperform the Nasdaq and the S&P, at least through January, and maybe a lot longer,” he said. said.
Here are the reasons he lists for Dow’s outstanding performance:
- The market believes the Federal Reserve can pull off a soft landingmay be due to Promotes inflation data And Minutes of the recent meeting of the central bank.
- Classical cyclical stocks are not so cyclical anymore, Consumers in particular are constantly on the move. Additionally, Cramer said, many cyclical companies in the Dow will benefit from the bipartisan infrastructure bill and the CHIPS Act.
- Supply chain problems that have plagued the Dow companies appear to be easing, If Recent earnings reports There are no symptoms.
- A strong US dollar has weakened in recent weeks. Pushing Dow companies with large international exposure.
- Long-term interest rates are also falling. This has been a “big boon” for many dividend stocks in the Dow.
The Dow is down about 6.85% for the year, while the S&P 500 and Nasdaq are down 16.8% and 29.4%, respectively.
Cramer explained that the reason the blue-chip index has done so well this year is because it is full of old-fashioned, profitable companies that return cash to shareholders.
Because the S&P 500 has a mix of older companies and newer, speculative companies, it has suffered the most, with the Nasdaq being filled by the latter and falling sharply as a result.
Cramer added that comparing how the major indexes have performed this year and what has driven their movements is important when examining how stocks have performed this year. “I think this is the most important story of 2022,” he said.