CNBC’s Jim Kramer warned investors not to make key market movements based solely on the Fed’s interest rate decisions, suggesting that key market themes have not actually changed in the wake of the central bank’s Wednesday meeting.
“Of course, we could have more solid attention from Powell… but the big theme wasn’t overturned. Term’s profits were no longer held back. In the end, everyone with half the brains knew we would get a quarter point cut,” he said.
“Why is that so? Because we don’t cut interest rates,” Kramer continued. “We will not buy or sell shares based on Jay Powell’s statement,” Cramer continued.
Wednesday’s session was mixed after the Fed reduced its benchmark overnight lending rate by 0.25% after its September meeting. It also showed that two more cuts could go ahead before the end of the year. Dow Jones Industrial Average Finished with less than 0.6% S&P 500 0.1% closed Nasdaq Composite I lost about 0.3%. The Fed’s move was largely anticipated by Wall Street, but some investors may have been disappointed by the committee’s more Hawkish outlook for next year, as members predicted only one rate cut in 2026.
The Fed cited recent weaknesses in the labour market in a post-meeting statement, saying, “Employment profits have slowed and unemployment has risen, but remains low.” The statement also said “inflation has risen and remains somewhat higher.”
For Cramer, the market response to the Fed’s decision means that some investors are hoping for greater cuts, or that some believe that their stocks are overvalued without major cuts.
He has listed several sectors that he believes could continue to perform, including technology, artificial intelligence, and banking. He also said, “I don’t see any real reason to be excited about the interest rate-sensitive circularity, including residential stocks,” but added that if the Fed seriously considers double-rate cuts, he might buy them.
The Fed is “snagged between rocks and hard places,” Cramer said. He continued, central banks must fight against ongoing inflation (due to tariffs) and weakening of the job market. Cramer said Fed Chairman Jerome Powell was wise and this was a desirable feature for those in his position. He added that Powell “don’t want to go ahead before him except that it becomes negative because no one knows what the real impact of tariffs is.
“I’m sorry to the audience who wanted something exciting, it’s stable as she goes from Powell,” he said. “And that’s, if you ask me, ask exactly what we need.”
