The stock market does not appear as strong as the headline numbers in the benchmark index may portray after taking a look at the performances of its components, CNBC's Jim Cramer said Thursday.
While the big tech stocks have made significant gains that carried the S&P 500 back to record levels, most of the stocks in the broad average are down this year, he said.
"When you get down into the weeds of this market, what you see is that there are a lot more losers than there are winners," said the "Mad Money" host, likening the stock market to a patch of grass. "That's the nature of the Covid economy, and now that there's no one in Washington willing to play gardener, maybe it's only a matter of time before the weeds overrun the entire patch."
The major averages climbed in Thursday's session, despite the negative news of 1.1 million new unemployment claims that were filed in the week ended Aug. 15. More than 1 million people applied for weekly jobless benefits in 22 of the last 23 weeks amid a global coronavirus pandemic.
The Dow Jones climbed almost 47 points for a 0.1% gain, breaking a three-day losing streak, to close at 27,739.73. The S&P 500 rose 0.3% to 3,385.51, a handful of points shy of its record close Tuesday, and the Nasdaq Composite rallied 1% to 11,264.95 for a new closing record.
"We have a bizarre situation where some companies are doing very well," Cramer said, "but a lot of other companies are getting crushed."
Big Tech names are all up double digits this year with Amazon and Apple, which boasts a $2 trillion valuation, both surging 78% and 61%, respectively, year to date. Nvidia, DexCom, West Pharmaceutical Services, PayPal and Abiomed are the top five S&P gainers this year with advances of more than 80%, according to FactSet.
On the losing side are the cruise ships, oil companies, pipelines, retailers, airlines and banks, among others, Cramer pointed out. Norwegian Cruise Line and Carnival, whose stocks are down more than 70% this year, have lost the most value on the benchmark. Occidental Petroleum, Coty and TechnipFMC round out the bottom five, all down 60% or more, based on FactSet data.
Kohl's is the biggest decliner in retail, dropping 63% from the beginning of the year. The company has lost nearly 19% in value this week alone.
The S&P 500 is now up 4.79% year to date.
Covid-19, which has infected at least 5.56 million Americans and been connected to nearly 174,000 deaths in the country, according to data compiled by Johns Hopkins University, and the economic lockdowns implemented to slow the spread have dealt the hardest hand to small businesses. In order to stay afloat in a physically distant and remote world, businesses have had to pivot to the web to connect with consumers.
Most small retailers can't pivot online fast enough, and many of them will go under without fiscal support from the government, Cramer said.
The S&P 500, however, continues to go higher, thanks to about 40% of the stocks that make up the index, he added.
"That's pretty incredible, and the lack of breadth here explains a lot more about how the real economy's doing," Cramer said, referring back to the grass analogy. "The truth is the weeds are more representative than the healthy patches of lawn, and, in many ways, it's getting worse, not better, as the weeds begin, I think, to infect the nice part."