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Jim Cramer investigates what's behind the reversal in the market's most speculative stocks
CNBC Television· 2025-09-25 00:58
Market Concerns & Analysis - The market is starting to worry about speculative stock froth, despite previous tolerance due to public demand [1] - A market downturn occurred with the Dow Jones Industrial Average (DJIA) decreasing by 172 points, the S&P 500 declining by 28%, and the NASDAQ shedding 0.33% [1] - The industry is considering which high-growth stocks have exceeded their potential future value [1] Federal Reserve Perspective - The Federal Reserve is monitoring overall financial conditions, with Chairman Jay Powell noting that equity prices are "fairly highly valued" [2][3] Valuation & Earnings - While some view data center-related stocks like Nvidia, Meta, and Alphas as expensive, their actual earnings per share are not significantly out of line [4] - The S&P 500 is trading at approximately 25 times this year's earnings and 22 times next year's earnings, which is considered high but not excessively so [5] - The industry can tolerate the S&P 500's current valuation, anticipating future earnings growth will make the market appear cheaper, particularly for stocks like Nvidia [5]
