CNBC’s Jim Cramer said investors should not jump the gun on buying stocks despite Monday’s market turnaround, fueled by President Donald Trump’s remarks that the Iran war may be nearing an end.
During an evening news conference, Trump told reporters in Miami that the U.S. is “achieving major strides toward completing our military objective” in Iran. He echoed remarks he made to a CBS reporter earlier in the day — remarks that reversed the stock market higher and oil prices lower.
The S&P 500 and tech-heavy Nasdaq — both of which fell as much as 1.5% earlier — closed with gains of 0.83% and 1.38%, respectively. The Dow Jones Industrial Average added 0.5% after falling nearly 900 points at session lows. West Texas Intermediate crude, the American oil benchmark, settled trading in New York down roughly 6% to just over $85 per barrel. WTI topped $119 in overnight trading — levels not seen since 2022 when Russia invaded Ukraine.
“Despite the extremely bullish close … it’s possible we may not be out of the woods. Look, it’s a tall order for the war to be over,” Cramer said on “Mad Money.” “But if you want stocks to go higher, you better hope it is.”
That’s because oil can’t go back to normal with hostilities flaring up in the Mideast. Since the weekend attack on Iran by the U.S. and Israel, crude prices have inversely driven the direction of stocks.
Cramer said Trump’s remarks alone do not mean the Iran conflict is over.
“Unfortunately, that’s not a decision the United States can make on its own,” he said. Instead, the “Mad Money” host listed four things that need to happen before markets can go back to normal or “it won’t be truly safe to buy stocks.”
Both sides must stop attacking oil facilities and desalination plants, Cramer said, adding that if Israel attacks an oil depot, then Iran may retaliate on facilities owned by Saudi Arabia, Kuwait, and the United Arab Emirates. “That’s gonna lead to much higher [oil] prices, because it’s literally knocking out production.”
Cramer said there must also be acceptance by Iran that the Strait of Hormuz will be free of attacks or the war won’t end. “Think of it like this: The worst-case scenario for commerce has already happened. The place that touches 20% of our oil is shut,” he added. “Our government can offer insurance, but as long as the Iranians are targeting oil tankers that attempt to cross the strait, nobody’s gonna take that offer.”
Not only does the Strait need to reopen, Cramer said, it needs to happen soon so that there’s not long-term damage to production.
Rounding out the list, Cramer argued there needs to be an off ramp for the war that would allow Trump to declare victory. Iran pledging that its nuclear ambitions are over, he said, would even suffice.
Looking ahead, there’s still a lot up in the air in terms of the Iran war. That’s why Cramer recommends investors exercise caution for the time being.
“We know the winners in this scenario, but are wary of the losers. It’s just in this environment, there could be many more in the loser column if the Trump administration can’t extricate itself from Iran and the price of oil doesn’t continue to move lower.” He added, “Let’s see in the coming days if the war is really won. Because if it isn’t won, I’m not sure if [this volatility] is over.”
