CNBC's Jim Cramer attributes the market's rise to record levels to both consumer and business demand. The "Mad Money" host breaks down how performances in luxury brands reflect consumer strength. Later in the show Cramer lays out what the $10 billion defense contract awarded to Microsoft means for the computer maker's cloud services.
The S&P 500 rose nearly 17 points, or 0.56%, setting a record close of 3,039.42, and the Nasdaq Composite expanded nearly 83 points, or 1.01%, missing its record close by about 4 points. The Dow Jones Industrial Average added more than 132 points, or 0.49%, though the 30-stock average is still about 400 points off its all-time high.
The S&P 500 set a previous closing high of 3,025.86 in late July. The index bounced from an intraday low of 2,822.12 in early August, according to FactSet, to stage a roughly 7.7% gain through Monday's market end.
"Without strong demand, the averages never would have made it this far," the "Mad Money" host said. He added that a trade truce between the U.S. and China helped "a host of flailing stocks to get their mojo back."
Strong stock performances in the high-end consumer discretionary space show the broader U.S. economy "may be in better shape" than investors are led to believe, Cramer said.
Cramer, using the charts of technician Bob Lang, a colleague and publisher of ExplosiveOptions.net, looked at some of the top names in the consumer discretionary sector. That includes a host of nonessential goods and services such as motor homes, cruises, snowmobiles and timeshares.
"That's about as discretionary as it gets," the host said. "These kinds of stocks only work when the consumer's willing to spend and banks are willing to lend."
On the other end of the spectrum, losing out on the potential $10 billion contract is not a "big deal for Amazon," the host said. The request for proposals came down to two of the most valuable companies by market cap.
"The Pentagon's basically saying that Microsoft's cloud platform is just as good as Amazon's, or at least close enough for government work," said Cramer, adding that it's "much more significant win for Microsoft Azure than it would be for Amazon Web Services."
Cyclical stocks have been one of the biggest surprises of earnings season. Cramer said he has a theory to explain it.
The host laid out five reasons why these stocks have been resilient — and what it means for investors.
In an environment where the bond market offers little payout — the yield on the 10-year U.S. Treasury is 1.85% — Dow and AT&T offer both higher yields and potential opportunities for growth, Cramer said.
"I recommend buying some here, and then maybe wait for the Fed to say something boneheaded on Wednesday that slams the market, or maybe the Labor Department's nonfarm payroll on Friday shows a surprise drop, you can buy some more then into weakness," he said. "Be patient. Dow and AT&T are now, in a safe way, paying you to wait.
In Cramer's lightning round, the "Mad Money" host zips through his thoughts about callers' favorite stock picks of the day.
Realogy Holdings: "Full disclosure: my wife works for them. I think that it's O.K. I do worry about the housing market. I think the housing market is just, for what they do, just O.K., not good enough. I'm going to say it's a cheap stock. I hesitate to say more than that."
Wendys: "Everyone thinks that Wendy's and McDonald's are going to be in an incredible war over breakfast. I think that Wendy's is in good shape and the stock is overdone on the down side. I may be want to wait until it goes under $20 to buy some, but I really like Wendys."
Disclosure: Cramer's charitable trust owns shares of Amazon and Microsoft.