Jim Cramer: Pete Buttigieg Is Good News for Wall Street

Investment guru Jim Cramer said that Pete Buttigieg’s victory in the first contest of the presidential primary earlier this week is good news for Wall Street.

Buttigieg narrowly won Iowa's Democratic presidential caucuses, the state party said on Thursday, after a long delay in releasing the results of the first contest in the race to pick a challenger to Republican President Donald Trump, Reuters reported.

Buttigieg, the moderate 38-year-old former mayor of South Bend, Indiana, eked out a win over U.S. Senator Bernie Sanders in Iowa, according to the state Democratic Party's complete count, which has been marred by technical and organizational errors.

U.S. Senator Elizabeth Warren, former Vice President Joe Biden and U.S Senator Amy Klobuchar trailed behind in the nation's first nominating contest.

Historically, candidates who win the Iowa caucuses see a boost in New Hampshire, and two opinion polls released this week showed Buttigieg within striking distance of Sanders, who has consistently been atop the field in the state.

With the unexpected victory, Buttigieg is establishing himself as a legitimate player in the primary, the CNBC “Mad Money” host said.

“Sure, the Iowa caucus fiasco hurt the Democrats, but the biggest takeaway was that Mayor Pete seems to have won ... and Pete’s the status-quo candidate,” Cramer said.

“He doesn’t want to destroy the insurance stocks by rolling out ‘Medicare for All.’ He doesn’t want to break up the banks,” Cramer said.

If Buttigieg were to become the nominee to go against Trump, “we’ll have two candidates who believe in free-market capitalism,” Cramer said.

“Until Iowa, it looked like the Republicans were overweighting the wealthy, who tend to own stocks, and the Democrats ... were putting a strong sell on the wealthy,” he said. “But if Mayor Pete’s a serious contender, the 2020 election might not be about class war, and you know what, that is bullish — another reason” the stock market has continued to climb this week, Cramer explained.

The results, which have been marred by technical and organizational errors, could reshape the 2020 race for the Democratic presidential nomination for November’s election and raise doubts about the future of Biden, the one-time front-runner.

Investors are weighing scenarios that would be relatively favorable for stocks overall, analysts have explained. These include Trump's re-election and victory by a seemingly moderate Democratic candidate such as Biden or former New York City Mayor Michael Bloomberg.

But stocks could fall if U.S. senators Sanders or Warren, who are seen as more likely to push for increased regulations in areas such as healthcare and technology, and for wealth taxes and harsher Wall Street rules, outperform in the primaries.

"The more Joe Biden and other moderates are overtaken by the progressives, I think the market will very gradually begin to price in more headwinds," Dave Lafferty, chief market strategist at Natixis Investment Managers in Boston, told Reuters.