Inflation is peaking, and that is ‘nirvana’ for stocks, Jim Cramer says

CNBC’s Jim Cramer on Wednesday said that inflation is peaking, which is good news for stocks that have been trampled in recent months.

“The stock market … totally saw peak inflation coming. I think you had to be deliberately obtuse to miss this because commodity prices have been collapsing a while ago, but now it’s undeniable,” the “Mad Money” host said.

Stocks jumped on Wednesday after the consumer price index revealed that inflation’s upward climb decelerated in July from the year earlier. All the major indices were up, with the S&P 500 reaching its highest level since May and the Nasdaq Composite closing at its best level since April.

Cramer said that inflation’s peak bodes well for investors looking to pick up shares of stocks they might have shed earlier this year.

“Peak inflation is nirvana for stocks, especially for out-of-favor stocks, like fast-growing tech plays or the financials or the consumer discretionary names,” he said. “That means you can buy everything from Microsoft to Wells Fargo to Target.”

And while this doesn’t mean that the economy is out of the woods when it comes to entering a recession, peaking inflation could help lift stocks even during an economic slowdown, according to Cramer.

“Some companies will absolutely be hurt by the upcoming recession, but others will see their stocks soar because they’re worth more in an environment where inflation is at last possibly under control,” he said.

Disclosure: Cramer’s Charitable Trust owns shares of Wells Fargo and Microsoft.