- "There's a new young crop of buyers who do not sell on the news," CNBC's Jim Cramer said Monday.
- After Moderna announced positive Covid-19 vaccine data, there wasn't much profit-taking in the stock or the broader market despite last week's gains in each.
- "They see good news and then they buy, and then no one comes forward to sell. It's rather remarkable," Cramer said. "We haven't seen this pattern ever."
CNBC's Jim Cramer said Monday that a new type of investor is behaving differently during the stock market's pandemic-era rally than what he has traditionally observed over his decades-long career on Wall Street and in financial media.
"There's a new young crop of buyers who do not sell on the news," Cramer said on "Squawk Box." "They're very different from the older buyers. They don't seem to want to sell. They see good news and then they buy, and then no one comes forward to sell. It's rather remarkable. We haven't seen this pattern ever."
Cramer's comments before Monday's opening bell followed the announcement from American biotech company Moderna that its coronavirus vaccine was more than 94% effective. The positive development sent Moderna soaring in the premarket, while also pushing U.S. stock futures higher. The Dow Jones Industrial Average later was up more than 400 points during morning trading. Moderna, whose shares were up nearly 400% in 2020, was higher by over 7%.
Economically sensitive stocks were leading the way Monday, with the airline-tracking U.S. Global Jets ETF up about 4%. Cruise operator Royal Caribbean was higher by more than 7%, while Carnival was up over 11%. This group of stocks, which would benefit from widely available Covid-19 vaccines curtailing the pandemic and allowing for a robust economic recovery, also were major beneficiaries last week after Pfizer and German partner BioNTech announced positive efficacy data from their late-stage trial.
Last Wednesday, two days after the Pfizer news, Moderna also hinted that it would be releasing its interim trial data soon, which provided a lift to the stock last week. From Wednesday to Friday's close, Moderna shares rallied more than 8% on the expectation its vaccine would also be highly effective like the one from Pfizer, since both use what's called messenger RNA technology, a new approach that uses genetic material to generate an immune response.
The run-ups in Moderna shares, and the broader stock market, were reflective of the "buy the rumor" part of the old Wall Street adage. However, once Moderna actually released the data, there wasn't a ton of selling going on, Cramer said. In other words, the second part of that adage "sell on the news" didn't really materialize. That pattern also took place in those other sectors that would benefit from the vaccine working well.
"The moment we got some news from Moderna that was positive, there was a surge of buying in the airlines, which I believe is done through an ETF, through a lot of the hospitality, and they tend not to get shaken out," said Cramer, who came to Wall Street in the mid-1980s after joining Goldman Sachs and later became a hedge-fund manager.
"That's how we got to up here," Cramer added, with the S&P 500 closing Friday at a record high and the Dow on Friday soaring to about 72 points away from its first record closing high since February.
At the same time, the U.S. is now experiencing a significant worsening of its coronavirus outbreak, with daily case averages at a record high and hospitalizations also rising considerably. For that reason, despite vaccine optimism, Cramer said later on CNBC that younger buyers who continue to pile into economically sensitive stocks should be mindful.
"The younger buyers ... who can't wait and have to buy at 4 a.m., 5 a.m., 6 a.m., they just are so enthused, and then the facts come, and then the facts just don't fit the story," Cramer said. "They do make you feel like it'll eventually be good, but I just don't get the sense that we're going to go on a cruise in the next four months. I just don't think so."
Alli McCartney, managing director at UBS Private Wealth Management, told CNBC on Monday there are multiple reasons stocks have been able to push higher despite near-term coronavirus headwinds.
"We have the perfect backdrop," she said on "Squawk on the Street," while acknowledging Cramer's observation of the power of the younger, more enthusiastic investors. "We have promise of an efficacious vaccine. We have an election outcome that, actually in the gridlock, is probably better than anybody was expecting, and we have this rotation driven by [earnings] revisions driven up, so long-term bullishness, short-term volatility is where we are."