The bond market might have spooked investors last week, but company quarterly reports are helping Wall Street maintain some confidence, CNBC's Jim Cramer said Monday.
The Dow Jones Industrial Average added nearly 250 points to continue a rebound from its worst trading day of the year on news of a yield curve inversion. The S&P 500 and Nasdaq Composite both climbed more than 1% during the session.
"I explained over and over again: you get a much better read on the economy by listening to the conference calls of individual large companies," Cramer said, "and those calls told me that the consumer ... is alive and well."
The Dow tanked 800 points last Wednesday when the yield on the 2-year U.S. Treasury note briefly surpassed the yield on the 10-year note. That triggered a market sell-off because the inversion, which signals that investors can make more money on the shorter-term bond than the longer-term one, has historically been a recession indicator. The 2-year bond yields more than 1.5% as of Monday. The 10-year yields 1.6%.
Cramer, however, isn't convinced that a recession is imminent. He has suggested that investors trim their holdings to protect some of their profits from the sell-off, but not to panic and sell everything. He thinks the economy is in good shape, thanks to the health of the American consumer.
"So if you took your cue from the panicking pundits and sold everything, you got burned," Cramer said.
Monday's market rally carried momentum from the week prior, he argued. Walmart saw same-store sales grow 2.8% in its latest quarter, which topped analyst expectations for 2.1%. Online sales spiked 37%. The stock is up more than 7% from the report.
Nvidia delivered better-than-expected results in its Thursday quarterly report, including a 9-cent earnings beat. The stock has surged more than 13% since the conference call. The chipmaker told a bullish story about the growth of artificial intelligence, which is being adopted by businesses across major industries including health care and transportation. Cramer said he was surprised to see the whole semiconductor cohort rise on Nvidia's report.
"These are secular trends and they won't be stopped," he said. "No one told [CEO] Jensen Huang that his product's dead unless the Fed aggressively cuts rates multiple times to stave off a recession. Perhaps, the demand is there regardless."
Estee Lauder also reported 15% sales growth in its skincare business. The company also predicted full-year sales will rise as much as 8% and profit will fall in the range of $5.90 and $5.98 per share, which topped Wall Street expectations of less than 7% and $5.81 a share. The stock popped more than 12% on the session.
Cramer also recognized that consumer demand drove the performances in UPS, Visa, Mastercard and Apple. The market is driven by confidence and is still leveraged to fears about the state of the bond market, he said.
"This rebound can easily be undone if the bond market turns us around, stopping traders in their tracks, but not commerce," the host said. "The recession talk hasn't vanished, even if it's now buried under a mountain of bullish data points, but on days like today, it sure is hard to find."
Disclosure: Cramer's charitable trust owns shares of Nvidia, Mastercard and Apple.