The stock market managed to surge in the first trading day coming off the worst week on Wall Street in over a decade because of coronavirus data that was not as bad as feared by the market, CNBC's Jim Cramer said Monday.
"I think the facts, and the concomitant reversal of [interest] rates from the ridiculous lows that they allowed, that's what allowed the market to roar today," the "Mad Money" host said, pointing to an article co-authored by Dr. Tony Fauci, director of the National Institute of Allergy and Infectious Diseases, in The New England Journal of Medicine on Friday.
The article suggested there is a 1.4% mortality rate connected to the COVID-19, the coronavirus that is believed to have originated in China and has spread across the globe. The deadly virus has spooked global markets, especially at the end of February.
The Dow Jones Industrial Average fell more than 4,000 points from its mid-February highs on worries that the coronavirus would dent world commerce. Businesses and factories in China, the world's second-largest economy, shut down as health officials there tried to stop the disease's spread. The 30-stock index rose about 1,294 points, or 5%, in Monday's session, while the S&P 500 and Nasdaq Composite both rallied more than 4%.
"I think stocks soared today because Wall Street realized that the coronavirus might be the equivalent of a severe flu season," Cramer said. "[That's] not great, but it's not going to cause the endless economic devastation that you'd expect from a virus with a 2% fatality rate. ... I'll take it."
The data was welcome news to investors who spent last week's sell-off moving their investments from riskier assets to safe-haven ones such as government bonds, which pulled interest yields down to record low levels. Market players were fleeing stocks due to uncertainties about the coronavirus' impact on business.
As of Monday, more than 89,100 cases have been confirmed and at least 3,040 deaths have been attributed to the disease. The vast majority of the cases are in China, though there has been an uptick in diagnoses in other countries.
Stocks were also lifted by a growing possibility that the Federal Reserve could cut the fed funds rate at its March meeting. Cramer, however, is less worried about a potential interest rate than he is about a vaccine being found.
"This is a public health problem. You can't cure the coronavirus with monetary policy," he said.
As far as portfolio management, Cramer said investors should continue to stay away from stocks associated with travel and leisure. The U.S. has issued travel restrictions and warnings to multiple countries stricken by the virus, including China, Italy, Iran and South Korea.
"We know that China's been practically shut down for the better part of a month now and anyone who works at a business that shuts down because of the virus is going to take a hit," he said. "That's why I think it's a very good time to reevaluate your portfolio and sell the stocks into strength that I think are going to continue to go down in a corona-induced slowdown."