Prominent market commentator Jim Cramer reportedly said that following the Federal Reserve’s policy announcement, he sees a narrowing market ahead with investors selling in a panic.
“Like I warned you the last couple of weeks, the ‘Johnnie-Come-Latelies’ heard something they didn’t like from the Fed, and they just skedaddled,” Cramer told CNBC. “They didn’t believe in what they owned, they had no conviction. They were only buying because they couldn’t take the pain of missing the rally. They can’t take the pain of the sell-off now, so they’re just selling everything,” he said.
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The market expert compared the central bank’s mentality toward the economy to that of an airplane trying to land, but wanting to burn off fuel so it doesn’t explode following touchdown. The apex institution cannot land the plane until it beats inflation, so it’s giving some time for the economy to get worse before it actually drops the hammer, Cramer said according to the report.
‘[Fed Chair Jerome] Powell and company are saying, “Hey, let’s circle around the airport, let’s burn off that excess fuel and then make a stab at it,”‘ Cramer said.
Price Action: The Federal Reserve announced a pause in its rate hike campaign during Wednesday’s policy but indicated it could hike rates by another 50 basis points this year. The Nasdaq Composite and the S&P 500 ended in the green following the announcement. The SPDR S&P 500 ETF Trust SPY closed 0.12% higher while the Invesco QQQ Trust Series 1 QQQ rose 0.73%, according to Benzinga Pro.
Cramer believes Fed may not need to tighten as much as it hinted at on Wednesday as it’s possible inflation will actually lessen on its own through job losses and wage cuts while rents may decline as new apartment buildings finish construction.
“We need the greedy people to finish selling. We need those who just came in off the sidelines to go back to the sidelines,” Cramer said. “Then and only then will the market be ready to resume the advance.”
Image and article originally from www.benzinga.com. Read the original article here.