Jim Cramer explains how to handle Tuesday’s market decline

CNBC’s Jim Cramer unpacked Tuesday’s market action, explaining why shares fell and how traders can take care of losses.

“Days like today are…dispiriting, they’re painful, and they usually aren’t alone,” he mentioned. “You have to trust the companies you believe in. Trust the market. That’s the only way to make big money in stocks long term.”

Tuesday’s session noticed the indexes decline, with the Dow Jones Industrial Average closing down 0.55%, the S&P 500 dropping 0.69% and the Nasdaq Composite shedding 0.82%. Wall Street largely took earnings in Big Tech giants which were main the bull market greater this yr.

Cramer recommended that Tuesday’s profit-taking had little to do with the shares themselves, reaffirming his religion in outfits like Nvidia, Apple and Microsoft. According to Cramer, September is traditionally a tricky month for shares. In an excellent yr for the market, huge establishments have a look at how a lot they’ve gained and begin to take earnings in September, he mentioned. He added that losses from essentially the most bullish shares on the market can “cast a pall on everything else.”

Current occasions and information from the White House are troubling traders, Cramer mentioned, particularly a federal courtroom’s latest ruling that a lot of President Donald Trump’s tariffs are unlawful. Cramer mentioned traders are fearful {that a} lack of tariff income will damage the huge federal deficit — which has been made even bigger by Trump’s sweeping price range invoice. He additionally talked about that there are issues forward of Friday’s labor report, which is a crucial inflation metric for the Federal Reserve. The new knowledge comes as Trump ramps up his criticism of the central financial institution and pushes leaders to minimize rates of interest.

Cramer inspired traders to maintain on to Big Tech development shares, which he mentioned can climate unfavorable circumstances and normally handle to rebound. He suggested towards shopping for the businesses that rallied on Tuesday and mentioned not to decide the market panorama based mostly on a single session.

“If you know what you own and why you own it, these days are garden-variety pullbacks…rain for your garden,” he mentioned.

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Disclaimer The CNBC Investing Club owns shares of Nvidia, Apple and Microsoft.