Mad Money

Jim Cramer lists 12 ways for stocks to shake off their September struggles

Key Points
  • CNBC's Jim Cramer on Wednesday offered investors 12 ways to help the stock market build a sustained rally.
  • "We don't just need a handful of these positives before I can start feeling better about this situation, we need almost all of them," the "Mad Money" host said.
  • "If we don't, then the next few weeks could be as brutal as advertised," he cautioned.
Cramer: Wall Street needs to see better jobs data and signs of moderating inflation

CNBC's Jim Cramer on Wednesday detailed a long list of problems that he believes need resolution in order for the stock market to overcome its recent malaise and build meaningful momentum.

"We don't just need a handful of these positives before I can start feeling better about this situation, we need almost all of them. If we get them, the market will soar, but if we don't, then the next few weeks could be as brutal as advertised," the "Mad Money" host said.

Cramer has said he's currently "neutral" on the market during what is a historically tough month for equities. All three major U.S. stock indexes are in the red for September, despite finishing higher Wednesday.

Here's Cramer's recipe for how market sentiment and stocks can go meaningfully higher:

1. Positive jobs picture

"We need some good news on the employment front. August's not-so-hot nonfarm payroll report has dogged us ever since we saw it, hasn't it?" Cramer said. "If we can get a big number in a few weeks, then we can conclude the lack of expanded unemployment benefits is solving the labor shortage," he added, while cautioning that's not necessarily a "sure thing."

2. Signs of inflation moderation

"Any business that's planning its budget for next year has to assume, for once, that maybe prices won't keep rising because right now when you put pen to paper, they all do," Cramer said. "At this rate, those businesses might not be able to afford to expand," he added.

3. Chip shortage must wane

A shortage in semiconductors has disrupted crucial industries such as autos for months. However, Cramer said, "until we get more manufacturing capacity, the shortages could continue."

4. Supply chains need to improve

The Qianwan container terminal of Shandong Port Group is seen at Qingdao Free Trade Zone in Qingdao, East China's Shandong Province, Aug. 7, 2021.
Costfoto | Barcroft Media | Getty Images

Beyond the chip crunch, Cramer said problems to supply chains more broadly continue to weigh on market sentiment because they're inhibiting economic activity.

"The rising cost of oil, the force majeure for paint ingredients, the endless wait for fixtures or washers or dryers; these shortages are freezing the economy. It needs to thaw if business is going to pick up," Cramer said.

Relatedly, Cramer said signs that congestion at ports is easing would help the market.

5. Corporate outlook

When the next round of earnings reports is released, Cramer said he wants to see companies indicating they're seeing "light at the end of the tunnel" as it relates to supply being able to meet consumer demand. "It was a good issue at first. ... It doesn't cut it anymore," he said.

Similarly, executives saying they see raw materials costs retreating would be a positive surprise for Wall Street, according to Cramer.

6. Schools must stay open

"The stock market needs ... kindergarten through 12th-grade schools to actually open and then stay open," Cramer said. While he acknowledged there may be Covid risks associated with that, he said he's simply stating that it can help the economy because it allows parents to more freely return to work.

"You want to solve the labor shortage? ... Open the schools," he said.

7. A decrease in Covid hospitalizations

"Maybe that happens because employers are starting to require vaccinations, maybe the delta variant infects so many people that we finally have some semblance of herd immunity," Cramer said. "A definitive decline in hospitalizations could send this market into overdrive."

8. Encouraging signs on travel

Travelers wait to drop their baggage at the American airlines counter in the Miami International Airport before starting the Labor Day weekend on September 03, 2021 in Miami, Florida.
Joe Raedle | Getty Images

Many investors get concerned when there's a dip in airline passengers, Cramer said, so a pickup in air travel — and hotel occupancy rates, as well — would offer positive economic signals.

9. A rise in bond yields

"We want rising interest rates caused by a stronger economy, not inflation. Don't fear higher rates; fear rates that rise when the economy's not doing great," Cramer said.

10. A slowdown in IPOs

Cramer said he only wants to see high-quality companies hitting the public markets, worrying that "all the IPOs and SPAC deals are flooding this market with excess supply that we do not need."

11. Increase in stock buybacks

"More buybacks like Microsoft's that clear up the excess stock supply and inspire confidence in corporate balance sheets," Cramer said. The tech giant announced a $60 billion buyback earlier in the day, alongside an 11% dividend hike.

12. Less focus on D.C. and China

Politicians in Washington and Beijing "need to get off the radar screen," Cramer said. In China, regulators' continued scrutiny of businesses is making Chinese companies difficult to own, Cramer said, while in the U.S. discussion about higher capital gains taxes and other policies can "make the market tremble."

"Before they think about raising taxes, they should do something useful like raising the debt ceiling," Cramer said.

Cramer explains what he thinks must happen for stocks to shake off their September struggles

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