CNBC’s Jim Cramer warned investors not to make major market moves based solely on the Fed’s interest rate decisions, suggesting major market themes have not really changed in the wake of the central bank’s Wednesday meeting.
“While we could’ve gotten more dovish languish from Powell, of course…No big themes were upended. No longer-term gains were put on hold. In the end, everybody with half a brain knew we’d get a quarter point cut,” he said, adding that the uneven market action following the Fed’s meeting might have even created opportunities for buyers.
“Why is that? Because we do not trade cuts in rates,” Cramer continued. “We don’t buy or sell stocks based on statements by Jay Powell,” Cramer continued.
Wednesday’s session was mixed after the Fed lowered its benchmark overnight lending rate by 0.25% after its September meeting. It also indicated two more cuts could be on the way before the end of the year. The Dow Jones Industrial Average finished up less than 0.6%, the S&P 500 closed down 0.1% and the Nasdaq Composite lost about 0.3%. While the Fed’s move was largely expected by Wall Street, some investors might have been discouraged by the committees’ more hawkish outlook for next year, as members forecasted only one rate cut in 2026.
The Fed cited recent weakness in the labor market in its post-meeting statement, saying “job gains have slowed, and the unemployment rate has edged up but remains low.” The statement also said “inflation has moved up and remains somewhat elevated.”
To Cramer, the market’s reaction to the Fed’s decision means that some investors were expecting a larger cut, or that there are some who believe stocks are overvalued without huge cuts.
He listed off a few sectors he thinks can continue to perform right now, including technology and artificial intelligence, as well as banking. He also said he doesn’t “see any real reason to get excited about the interest rate sensitive cyclicals, including the housing stocks,” but added that he might buy them if the Fed had seriously considered a double rate cut.
The Fed is “caught between a rock and a hard place,” Cramer said. The central bank must contend with continued inflation — much of which comes from tariffs — and a weakening job market, he continued. Cramer said Fed Chair Jerome Powell is prudent, which is a desirable characteristic for those in his position. He added that Powell doesn’t want to get ahead of himself because “nobody knows what the real impact of tariffs will be, except that it’s going to be negative.”
“Sorry spectators who wanted something exciting, it’s steady as she goes from Powell,” he said. “And it’s, well, if you ask me, exactly what we needed.”
