Investors rotated money from fast-growing stocks to "clean companies with no real flaws" as major indexes dipped during the session, CNBC's Jim Cramer said Wednesday.
The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all slipped no more than 0.30% on the trading day. The action coincided with a Federal Reserve report that said many businesses have reduced their growth forecasts as the U.S.-China trade war drags on.
"But the bottom line is that today's winners are immune to the fallout from the trade war. They can create terrific earnings from the consumer, or from health care businesses, that have nothing to do with China," the "Mad Money" host said. "For this session, that was enough to do the job."
Cramer cited strong quarterly performances in reports this week from the big banks, including J.P. Morgan Chase, Citigroup and Bank of America. J.P. Morgan, shares surging more than 3% on the Tuesday report, led the fray with record revenue that smashed Wall Street's estimates. The latter two also turned in top- and bottom-line beats.
Bank of America, whose shares climbed 1.48% off a Wednesday earnings report, posted 7% loan growth in its consumer banking division, a sign that the consumer is in good shape, the host pointed out. The big banks were not as hostage to the trade war as many thought because of their link to the consumer economy, Cramer suggested.
"With their consumer emphasis, the big banks can decouple from the trade wars," he explained. "Now, I know the Commerce department just released some ugly retail sales numbers this very morning — down 0.3% in September — but these banks tell a different story. They've become the ideal names for this Starkist-style market ... [because] they're not flashy, they're just tasty."
Last month, monthly U.S. retail sales declined for the first time since February as consumers cut back spending on building materials, online shopping and cars, according to the Commerce Department. A "more durable slowdown" could hit the economy if consumerism continues to fall, BMO Capital Markets' Ian Lyngen said in reaction to the September report.
Cramer also recognized positive quarterly results printed by health care and transports companies. Johnson & Johnson rose more than 1.60% in back-to-back days after delivering an earnings beat Tuesday, despite facing legal troubles over talc and opioids. UnitedHealth's stock surged more than 8% Tuesday after topping profit estimates. United Airlines shares jumped about 2% in Wednesday's session after the company raised its full-year guidance.
The host juxtaposed the aforementioned winners to the negative pin action in high-growth stocks of Workday, ServiceNow, Adobe and Salesforce. Workday had the biggest losses of them all, plummeting more than 11% in Wednesday's session.
"Can this rotation last? I don't think it's permanent. They never are," Cramer said, arguing that investors in coming days will move past the bank and health-care stocks to circle back to fast growers as the global economy slows. "Still, the high-flyers that got hammered today will need to report some terrific quarters before this market's going to forgive them."
Disclosure: Cramer's charitable trust owns shares of J.P. Morgan Chase, Johnson & Johnson, Citigroup and UnitedHealth.