Jim Cramer explains how to handle Tuesday’s market decline

CNBC’s Jim Cramer unpacked Tuesday’s market action, explaining why stocks fell and how investors can deal with losses.

“Days like today are…dispiriting, they’re painful, and they usually aren’t alone,” he said. “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 saw 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 profits in Big Tech giants that have been leading the bull market higher this year.

Cramer suggested that Tuesday’s profit-taking had little to do with the stocks themselves, reaffirming his faith in outfits like Nvidia, Apple and Microsoft. According to Cramer, September is historically a tough month for stocks. In a good year for the market, big institutions look at how much they’ve gained and start to take profits in September, he said. He added that losses from the most bullish stocks on the market can “cast a pall on everything else.”

Current events and news from the White House are troubling investors, Cramer said, especially a federal court’s recent ruling that many of President Donald Trump’s tariffs are illegal. Cramer said investors are worried that a loss of tariff revenue will hurt the massive federal deficit — which has been made even larger by Trump’s sweeping budget bill. He also mentioned that there are concerns ahead of Friday’s labor report, which is an important inflation metric for the Federal Reserve. The new data comes as Trump ramps up his criticism of the central bank and pushes leaders to cut interest rates.

Cramer encouraged investors to hold on to Big Tech growth stocks, which he said can weather unfavorable conditions and usually manage to rebound. He advised against buying the companies that rallied on Tuesday and said not to judge the market landscape based 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 said.

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