Rally in the market will be temporary until the Fed overcomes inflation

CNBC’s Jim Cramer warned on Monday that any market rally would be temporary until the economy cools down.

“Right now you can get a rebound. However, without additional data that shows the Fed is indeed winning the war on inflation, rates will continue to rise steadily and any rally… will have a very short shelf life,” he said.

Stocks fell on Monday ahead of the release of the producer price index and consumer price index later this week, which will shed more light on the state of inflation. The Nasdaq Composite is down more than 32% for the year after falling on Monday, while the S&P 500 is down more than 24% this year.

In 2022, markets were rattled by soaring inflation, higher interest rates by the Federal Reserve, Russia’s invasion of Ukraine, and fears of a recession.

However, according to Kramer, the market still has a long way to go before it hits the bottom. Previously, he said that inflation must come down in three key areas for the Fed to stop wreaking havoc on the market.

“Until the market is oversold, which we don’t have, and until we get softer data on wages, food and housing, you have to treat all these rallies as fake,” he said.

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