Cramer Gives 3 Reasons Why The Market Rallied On A Day When It Had No Business

Wall Street should have fallen on Tuesday, but the stock market had a great run.

The usual suspects – tons of negative analyst notes, rising bond yields, mixed earnings, weak housing data and rising commodity prices – were all in the market Tuesday. Not to mention James Bullard, Chairman of the Federal Reserve Bank of St. Louis a day earlier, that raising interest rates by 75 basis points at an upcoming policy meeting could be a way to speed up the central bank’s fight against inflation.

“If the usual suspects all have alibis, what can explain today’s unexpected rally,” CNBC’s Jim Cramer told Mad Money Tuesday. “I think we tend to underestimate our advantages,” he added.

Cramer cited three main reasons for what he called the “bizarre actions” in the market.

The market was oversold, making it harder for stocks to crash.

Cramer recalled 1994 when the Fed doubled interest rates and stocks were still rallying. If history is any indicator, Bullard’s harsh speech might not be so bad after all, he said.

Another reason for the market’s resilience on Tuesday, according to Cramer, is that the US is in a better position than other countries, pointing to America’s reopening of the economy and reliable sources of energy.

Admittedly, inflation is a problem, but Cramer has an answer for that, too.

“We have higher prices for flank steaks, more expensive corn flakes and higher gas bills, but we also have much higher wages to combat the pain,” he said.