Prominent market commentator Jim Cramer has said just because the market is suffering, investors should not expect the Federal Reserve to go easy on the economy and that even though Jerome Powell is not explicitly trying to send stocks lower, he won’t be "shedding any tears over it."
“Investors have to learn that the Fed is not your friend, it’s not your pal — if anything, it’s your enemy, at least until [Chair] Jay Powell finally beats inflation,” he said according to a CNBC report.
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Major Wall Street indices closed over 2% lower on Thursday, over fears of recession after retail sales in the United States saw their steepest drop in close to a year last month. On Wednesday, the Federal Reserve in its policy announcement had projected rate hikes through next year with no cuts until 2024.
The Nasdaq closed 3.23% lower while the Dow declined 2.25%, marking its worst day in three months. The SPDR S&P 500 ETF Trust SPY closed 2.45% lower while the Vanguard Total Bond Market Index Fund ETF BND closed 0.054% higher.
“Powell could not have been more clear that … he’s not just trying to stabilize prices at these levels, he wants to roll back the price increases from the last couple of years,” Cramer said.
The market commentator explained the central bank’s main mission is to rein in inflation and reminded that it plans to hike rates until prices are down significantly. “While [Powell’s] not explicitly trying to send stocks lower, he’s certainly not going to shed any tears over it. If anything, lower stock prices are a win for the Fed,” Cramer said.
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