Jim Cramer Warns Wall Street Is Underestimating Oil and AI Spending Risks

According to CNBC, Jim Cramer said Wall Street may be underestimating a growing set of risks for stocks, including higher oil prices and heavier spending on artificial intelligence. Speaking on "Squawk on the Street" before Thursday's market open, he said he was struggling to find reasons to buy and had plenty of reasons to sell. He pointed to a weak session in which the Dow Jones Industrial Average fell more than 400 points, the S&P 500 dropped more than 1%, and the Nasdaq Composite lost about 2%. Cramer also said the S&P 500 was down just 1.5% from its June 2 record close as of Wednesday's finish, while the Nasdaq was about 5% below its June 2 peak and the Dow was about 1.6% under its July 6 record close. Cramer said Brent crude surged more than 6% to above $100 a barrel after Houthi militants in Yemen said they attacked two Saudi Arabian oil tankers in the Red Sea, and after President Donald Trump warned the U.S. would retaliate and bomb Iranian infrastructure. He said the move in crude lifted inflation concerns and pushed the 10-year Treasury yield to its highest level since January. The Federal Reserve's policy committee is due to meet next week, and CME FedWatch put the odds of a quarter-point rate increase at 38%, up from 12% a week earlier. He also said Alphabet's latest quarter highlighted the cost of the AI buildout. Alphabet recently said it planned to raise roughly $85 billion through stock sales, on top of higher debt issuance this year.