Cramer explains why he’d wait before buying Nucor on weakness

CNBC's Jim Cramer said it's not yet time to invest in Nucor, a steelmaker whose stock got hit on Tuesday after its earnings report Monday evening failed to impress Wall Street.
"The weak quarter wasn't a surprise, but the discouraging guidance for the fourth quarter, that was a surprise, and makes it harder to get behind."

CNBC's Jim Cramer said it's not yet time to invest in Nucor, a steelmaker whose stock got hit on Tuesday after its earnings report Monday evening failed to impress Wall Street.

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"As much as I would've liked to tell you to dive into Nucor here … After last night's update, I'm little less sanguine," he said. "The weak quarter wasn't a surprise, but the discouraging guidance for the fourth quarter, that was a surprise, and makes it harder to get behind."

Investors had been optimistic about the stock after the Federal Reserve implemented a hefty rate cut, as industrials tend to do well when rates are lower. Cramer said Nucor's quarter was disappointing, and by close shares were down more than 6%. He was most worried about guidance for the steelmaker's current quarter, with management citing issues like weakness in key markets like construction, manufacturing and autos, as well as broader geopolitical unrest, election uncertainty, and more imports of steel products. However, Cramer pointed out that there were a few bright spots in the quarter, namely in markets related to construction of semiconductors and data centers.

Nucor indicated that more rate cuts are likely to improve business. But Cramer said he doesn't "feel comfortable pounding the table on the steels or the other materials stocks" until there's more information about the the Fed's next decision. He said he's fairly confident the Fed has tamed inflation, but added that there will be more clarity about rate cuts after the presidential election and the central bank's next meeting.

While he said he currently thinks the Fed will keep cutting rates and pave to way for Nucor and other materials stocks to rally, he said investors don't need to make a determination about the situation just yet.

"We don't have to decide that today — given that the situation's uncertain, we can keep watching and gathering information for the next couple weeks," he said. "Won't be too late to make on a decision on Nucor when we know more about where we're headed."