Cramer says Arm IPO infused ‘sidelined money’ into the market, steering Wall Street away from the bears

CNBC's Jim Cramer emphasized that Arm's IPO on its own hasn't changed market conditions, but it has changed how investors feel.
"There's so much sidelined money at all times waiting to get in, waiting for a signal that things might be better, and after 18 months of no IPOs to speak of, the multibillion dollar Arm deal was exactly what they needed," Cramer said.

CNBC's Jim Cramer on Thursday told investors he thinks Arm Holdings' initial public offering infused "sidelined money" into the market, giving Wall Street a boost.

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"There's always so much sidelined money at all times waiting to get in, waiting for a signal that things might be better, and after 18 months of no IPOs to speak of, the multibillion dollar Arm deal was exactly what they needed," Cramer said. "Suddenly all of this sidelined money comes pouring back in because the IPO market is a terrific barometer of market health."

He emphasized that Arm's IPO on its own hasn't changed market conditions, but it has changed how investors feel. Cramer explained that a multibillion dollar IPO like Arm "blots out the negatives and accentuates the positive" for investors and bankers, giving the market a "change of heart."

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Cramer admitted that a successful Arm IPO doesn't erase numerous factors that could bring the market down, such as a looming United Auto Workers union strike and hot inflation numbers from August's consumer price index report. To Cramer, rising rates from the Federal Reserve have controlled the market's narrative since it began tightening and gave bears "the upper hand intellectually" most of the time.

"The bears don't have the upper hand emotionally, at least not today. That belongs to Arm and its tech and financial acolytes," Cramer said. "Every now and then, the emotional hand can be as powerful as the intellectual hand. This is one of those times."