Investors were startled and Wall Street coughed up profits after it was announced that import tariffs could remain after a US-China trade agreement was signed on Wednesday, CNBC's Jim Cramer said Tuesday.
The Dow Jones Industrial Average rose nearly 150 points to its early afternoon highs before ending the session at around 32 points. The S&P 500 and Nasdaq Composite reached new highs on the trading day before declining 0.20%.
"If today's afternoon retreat turns into a full decline later this week, consider that a sell-off would be a terrible waste," said Mad Money's host. "So many companies [are] do so well. I would like to buy it, but at this point only if it is weak. "
After trade reached new highs, the market gave way after it was announced that tariff withdrawal on Chinese imports would be delayed until Washington and Beijing agree on a second phase trade agreement. People were worried about the uncertain way to reach another agreement. The two countries are preparing to sign a long-awaited so-called phase 1 trade agreement in Washington, DC on Wednesday.
Investors are still waiting for the full details of the trade deal, but the latest development is one that Cramer, who supported President Donald Trump's trade war, approves. He added that the market was "overbought", which contributed to the slump in late Tuesday.
He said, "I think it will make a lot of sense to keep tariffs going until China actually delivers on its promises – since they have doubled us so many times. It should have caused a rally and not a sell-off."
Outside of the trade talk, Cramer pointed to "amazing" quarterly reports from Delta Air Lines, Citigroup and J.P. Morgan Chase. The two bank shares gained more than 1% as the number of commercial aircraft rose by 3.3% on that day.
J.P. Morgan, which benefited from its bond trading performance, reported a profit of $ 2.57 per share, and Citigroup, also driven by bond trading and the consumer business, posted a profit of $ 1.90 per share. Delta's adjusted earnings per share were $ 1.70. This was due to lower fuel prices and strong demand for travel in the last quarter.
Wells Fargo was the "only fly in the ointment," said Cramer. The competitive bank, now led by CEO Charles Scharf, saw that legal fees were pocketed while low interest rates negatively impacted business. The bank missed both the upper and lower limits.
Although the market is overheated, banks, according to Cramer, showed some positive signs for the consumer.
"Statistics from these banks show that a robust consumer is still spending within her means," said the host. "This is an encouraging background, especially when we get into a short-term sales phase after a remarkable run."
Disclosure: Cramer's non-profit foundation owns shares in J. P. Morgan Chase and Citigroup.