Mad Money

Cramer: Facebook, Amazon and Apple's quarters kickstarted this market rally

Key Points
  • "Mad Money" host Jim Cramer explains how earnings surprises from three tech giants gave way to a marketwide rally.
  • Facebook, Amazon and Apple delivered stronger than expected results in their late April, early May reports.
Facebook, Amazon & Apple kickstarted this rally

One month ago, the market looked to CNBC's Jim Cramer like it was riddled with fear and volatility. But three recent earnings reports changed the whole landscape.

"It all started with three days in tech," the "Mad Money" host said on Thursday. "Facebook, Amazon and Apple reported and everything began to turn around."

Before earnings season kicked off, these three technology stocks had been sliding on a cacophony of worries.

Facebook was embroiled in a data-mining scandal that brought its CEO to Congress; Amazon was being bombarded with tweets from President Trump; and shares of Apple were falling on endless analyst reports that iPhone X sales would miss the estimates.

As a result, expectations were muted ahead of the companies' earnings reports. But on April 25, Facebook bucked the negativity with a top- and bottom-line earnings beat, steady user engagement and ongoing investments.

"Turns out there was no slowdown and management made it clear that business remained strong in the month of April, right into the teeth of the [congressional] hearings," Cramer said.

"The short-sellers had built up a considerable position in Facebook ahead of the quarter, and after these blowout numbers, the stock surged higher," he added. "Money managers went from hating Facebook to loving it pretty much overnight."

Amazon, which had become a target of Trump's for its tax practices and deal with the U.S. Post Office, started to come back after CEO Jeff Bezos announced that it had accrued 100 million Prime members.

But Amazon's earnings report really jump-started the e-commerce giant's recovery.

"We got a monster blowout, just a gigantic upside surprise with the company earning $3.27. Wall Street only expected $1.25," Cramer said. "I thought there was a typo. I thought Amazon made $1.27, not $3.27."

Amazon's 43 percent revenue growth helped drive its stock up dramatically after the report, aiding the tech-led comeback.

Then, on May 1, Apple's earnings report brought it home with higher than expected results, a strong China business and a $100 billion share buyback — "the biggest surprise of all," Cramer said.

"The numbers here were outstanding," he continued. "Just like we saw with Facebook and Amazon, the negative rap on Apple turned out to be bogus."

All three earnings wins helped to lift a slew of related stocks as well, Cramer said. Shares of semiconductor makers, data center plays, cloud-computing companies, e-commerce rivals and social media operators "came back to life," he said.

Paired with tailwinds from Warren Buffett's positive market outlook, a strong employment report from the Labor Department and signals of low inflation, the earnings surprises helped stem worries about trade policy that have threatened stocks since February, Cramer argued.

"This rally is about converting the unbelievers. As the bears became bulls, this market suddenly got its mojo back," the "Mad Money" host said. "Now the real fear on Wall Street is not of losing money. Instead, they're #FOMO, afraid of missing out on the rally, and without any big earnings reports on the horizon, you can't blame the skeptics for changing their minds. When the bulls stampede, you either join the rush or you get trampled."

WATCH: Cramer on how Facebook, Amazon and Apple sparked the rally

Cramer: Facebook, Amazon and Apple's quarters kickstarted this market rally

Disclosure: Cramer's charitable trust owns shares of Facebook, Amazon and Apple.

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