CNBC’s Jim Cramer attempted to put to bed any fears on Wall Street that Wednesday’s 50 basis point rate cut was a negative move for the market.
CNBC's Jim Cramer attempted to put to bed any fears on Wall Street that Wednesday's 50 basis point rate cut was a negative move for the market, noting that these cuts are rarely bad news, as long as they're widely expected.
"You need to know that a rate cut is never bad for stocks, as long as it's telegraphed," he said."A large rate cut, as long as it's communicated to the media with plenty of time in a considered way, is also acceptable."was a negative move for the market, noting that these cuts are rarely bad news as long as they're widely expected."You need to know that a rate cut is never bad for stocks, as long as it's telegraphed," he said.
Investors were anticipating interest rate cuts for some time, with most convinced the Federal Reserve would issue a September cut, but unsure whether it would be by 25 or 50 basis points. The Fed's aggressive move may havesome — who were perhaps worried the large cut signaled serious problems with the economy — as stocks wavered following the announcement.
Rate cuts give investors official confirmation that they are no longer"fighting the Fed," he continued, saying that cuts pump more money into the market, which is positive. Cramer added that a double rate cut means even more cash will flow in from the sidelines. An easing cycle also produces winning stocks that are"varied and exciting," he said, naming those in the homebuilding sector.
"As long as the Fed keeps staging its cuts perfectly, like they did with this one, then your job is to know when you're snowed and bring a down parka," he said."Tune out the naysayers and you'll be just fine, because the Fed is now your friend. That's all that really matters.
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