Strong earnings weren’t enough to save stocks in this unpredictable market, but CNBC’s Jim Cramer warned Wednesday that investors who give up now could miss out on the next rally.
Stocks fell sharply during the session, S&P500 decreased by just over 1%, Nasdaq 1.9% dropout and Dow Jones Industrial Average Close slightly lower.
Cramer said it’s nearly impossible to predict the market’s next move due to uncertainty surrounding inflation, interest rates and the war with Iran. “You just want to throw things away and go home,” the “Mad Money” host added. “But even if I did buy, would I be able to buy it back in time for the 10-day period when I would have made all the money for the year? I doubt it.”
Historical market data highlights that risk. According to JPMorgan, an investor who invested $10,000 in the S&P 500 index and missed out on the 10 best trading days from 2005 to 2024 would have ended up with less than half the wealth of someone who kept the entire investment.
Cramer cited Wednesday’s inflation report as an example of market unpredictability. Consumer prices rose 0.6% in September from the previous month, slightly more than expected, initially causing U.S. Treasury yields to rise. They then reversed course, even as oil prices continued to rise. Yields typically rise when inflation heats up, as investors expect more aggressive interest rate hikes from the Federal Reserve.
Conflicting signals are complicating speculation about the Federal Reserve’s next action. Further hikes could slow the economy, while leaving them unchanged risks raising long-term borrowing costs. Cramer argued that an end to the war with Iran could cause oil prices to drop significantly, easing inflation without further intervention from the Fed.
Corporate profits are largely unknown. investment bank morgan stanley reported a decent quarter, but its stock still fell nearly 3%. Also a semiconductor manufacturing equipment manufacturer ASML reported strong earnings and demand growth, but the stock reversed early gains to close 4% lower with broader declines in the chip sector.
“It’s becoming very difficult to have faith,” he said, as economic indicators and corporate performance do not show a clear direction. Still, he cautioned against exiting the stock completely. Even investors who manage to avoid further losses risk missing out on the market’s eventual recovery.
