Cramer on the Market's 'Weight' Problem
The market has a "weight" problem, Cramer said Wednesday.
The financials account for 15 percent of the S&P 500, which is a problem because the sector has been so rotten lately, Cramer explained. Technology, another beaten sector, makes up 17.95 percent of the S&P.
"The S&P just can't overcome that weighting," Cramer complained. "No wonder every day it's sluggish, at best."
Meanwhile, more than 10 percent of the S&P is made up of companies that sell discretionary goods. So as gas prices continue to climb, consumers are likely to buy less of these products.
Typically the market would be helped by a 10 percent weighting in staples, or those goods consumers can't do without. But those goods have a heavy plastic component because of the packaging involved, so these companies aren't making as much as they could. Some of staples did well on Thursday, but not enough to make a difference.
The market should also be helped by the industrials. After all, industrial companies with strong overseas sales benefit from a weak U.S. dollar . The problem is that they haven't been able to sell as much to Japan, which has yet to get back online since the natural disasters in March. It's also selling less to China and India, which are facing higher interest rates. Europe, meanwhile, continues to suffer from debt concerns. So any gains in the industrials, which accounts for 11 percent of the S&P, can't make up for financials and tech.
So what's the fix? Cramer thinks something needs to be done to combat higher oil prices. If that were to happen, he thinks the industrials could stand to benefit. Lower oil prices would also lead to lower gas prices, giving the consumer more money to spend elsewhere. In turn, retail, restaurants, travel and leisure and other discretionary spending would increase.
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