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Tech leads market higher after China trade deal scare — what Cramer and others are watching now

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Stocks rise after headlines clarify U.S.-China trade deal ongoing—Here's what three experts are watching now

Tech was the story of the day on Tuesday.

Shares of Apple hit an all-time high, leading technology stocks and the broader market higher after the company rolled out new operating systems for its products at its WorldWide Developers Conference.

The moves helped U.S. stocks recover from an overnight scare tied to comments made by White House trade advisor Peter Navarro on Fox News' "The Story" about the U.S.-China trade deal that suggested the deal was over. Navarro later clarified that his comments were "taken wildly out of context" and "had nothing at all to do with the Phase I trade deal, which continues in place."

Market watchers, including CNBC's Jim Cramer, see more runway ahead for certain groups.

Here's what they said Tuesday:

What's working

Cramer, host of "Mad Money," said his Covid-19 Index of stocks to buy during the coronavirus pandemic has reached a collective market cap of $12 trillion:

"These are all companies that do well in the time of a pandemic. I would've thought, given it was my first pandemic, that nothing would do well in a pandemic, but instead, Tractor Supply does incredibly well in a pandemic because people want to be outdoors. Home Depot does well because people are indoors and want to make their home into an office. Zoom. I could go on and on, and the companies whose stocks are just really popping are companies that do better in a stay-at-home, work-at-home environment. I mean, it's amazing how well some of these companies are doing. And they're not supposed to be well, but the market has nothing to do with the U.S. economy. The U.S. economy's small and medium-sized business."

'Fast and furious Fed'

Alli McCartney, a managing director at UBS Private Wealth Management, said it'd be difficult for investors to fight what she called the "fast and furious Fed":

"The market, since, basically, quarantine, has been driven by our fast and furious Fed, which has been followed by Federal Reserve support around the world that is both unprecedented in scope and extraordinarily targeted. There are also two other things which are driving the market and I think will continue to produce volatility, one of which was evidenced [Monday] night, which is continued conversations and tension and volatility around the election. China rhetoric is going to pay a large part of that. Taxation will also pay a large part of that. The other thing is simply the second wave. Now, obviously, we've seen both in this country and in Asia significant second waves, but that seems to not be affecting the market in the way in which a lot of us thought it would. And, again, that just simply goes back to the Fed. When you look at the amount of stimulus, the amount of money — M1, money supply — that's been put into this economy, in the last three months, our money supply year over year has grown 34%. There is a strong correlation between year-over-year growth in money supply and, not surprisingly, in multiples, in valuation and in equity prices. And … again, [a] fast and furious Fed is really tough to fight on a micro level."

'The biggest mistake an investor can make'

Leo Kelly, CEO of Verdence Capital Advisors, emphasized the importance of discipline:

"As long as the pace of change continues to improve, then I think it's still sustainable. In other words, when we look at economic data, while it is not as good on any measure as it has been, it is improving, it is improving consistently, and that pace of improvement is actually accelerating. More importantly, in the world of the science, we're seeing that improve dramatically. So, when we look at whether it's vaccines or it's therapeutics, there's so much going into that solution all at one time – money, brain power. That is developing very, very quickly and that gives hope that we're going to open up quicker and we're going to have a much faster recovery. Add to that the Fed, add to that the stimulus and all of the capital that's poured in the system, and it's not very surprising that we have a recovery. Now, in terms of valuations, obviously, there are pockets of the market that have really shot up and are starting to reach extremes. There are some significant valuation gaps in the market between certain sectors and industries, and I think investors just have to be very smart and disciplined at this particular time. I think the biggest mistake an investor can make is trying to match the volume of news flow with the volume of activity in their portfolios. This is a point where you have to be smart. It's good to have a little cash on the sidelines. Expect volatility and be mindful of [three] things: your allocation, your targets and what the valuation is in the market. Discipline is the call here, especially after a run this significant."

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