“While the stock market has experienced two consecutive days of positive performance, Jim Cramer expresses concern that these gains may merely be short-lived, raising questions about the sustainability of the market’s upward trajectory.”
CNBC’s Jim Cramer expressed concerns about the recent market action, questioning its sustainability. While the major indexes saw gains over the past two days, Cramer believes that these positives may be dependent on the outcome of the Federal Reserve’s Wednesday meeting.
Cramer highlighted industrial equipment maker Caterpillar as an example. Despite reporting decent earnings, the company’s share price slid. Cramer attributed this to fears about a potential slowdown in the broader economy, with investors looking past the government’s plans to spend trillions on infrastructure.
In Cramer’s view, the market undergoes an “instant wholesale revaluation process” based on the macro environment controlled by the Fed and the yield curve. This process may only end when long-term interest rates peak, either through the bond market stabilizing or the Fed deciding to stop rate hikes. However, Cramer acknowledged that it is uncertain when this outcome will occur.
Positive days like the ones recently experienced may provide hope for bullish outcomes and faith in future projections. However, Cramer cautioned that a downturn in the market could quickly erase those gains.
In summary, Cramer’s concerns about the market’s sustainability revolve around the Fed’s actions and the potential for a slowdown in the broader economy. The market’s constant evaluation of companies based on the macro environment creates uncertainty, and Cramer emphasized the need to closely monitor interest rates and the Fed’s decisions.