Rate Cuts May Not Come Anytime Soon, Cramer Says: 'Fed's Not Going To Stop Tightening Until…'

Zinger Key Points
  • The market is a hostage to the Federal Reserve, Jim Cramer says.
  • Labor shortages and faster pace of new company formation has perked up wages, he noted.

The Fed pivot the market is fervently hoping for may not materialize yet, CNBC host Jim Cramer said on Monday.

What Happened: Cramer listed four jobs-related data points to lend credence to his expectations of a higher interest rate environment in the near term.

Very limited people are reentering the workforce, Cramer said. This, according to him, won’t help reduce wage inflation.

Cramer highlighted the mismatch between job openings and job seekers. There aren’t many engineers available even as they are required to carry out measures implemented under the 2022 Inflation Reduction Act, he added.

Cramer also noted that there were too many people working in the enterprise software industry, portending potential layoffs.

See Also: How To Survive A Stock Market Crash

Acceleration in the pace of creation of new companies over the past two years has pushed up wages, Cramer said.

“This market’s hostage to the Federal Reserve, and the Fed’s not going to stop tightening until they see more evidence of real economic pain. Unfortunately, we’re not there yet,” Cramer added.

Why It’s Important: Dovish minutes of the November monetary policy meeting sent the market higher last week, with the S&P 500 Index breaking above the 200-day moving average for the first time in about seven months.

The major indices have pulled back since then amid a lack of follow-through buying as the visibility into the interest rate outlook remains poor.

The state of the job market has a bearing on the market direction.

“You’ve got to figure out when people will start coming back to the workforce and when money-losing companies will let their workers go or simply go bankrupt,” Cramer said.

Price Action: The SPDR S&P 500 ETF Trust SPY, an exchange-traded fund tracking the S&P 500 Index, was edging up 0.06% to $399.81, according to Benzinga Pro data.

Read Next: Wharton Professor Jeremy Siegel Says 2023 Recession Odds 'Virtually 100%' If The Fed Doesn't Pivot: Here's What Needs To Happen

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Posted In: NewsFederal ReserveMarketsMediaTrading IdeasInflationJim CramerRate CutsS&P 500 Index
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