CNBC’s Jim Cramer said a pair of major investment issues have been resolved in the near term, suggesting this is a reason for the stock market rally on Wednesday.
“While I still have a lot of concerns, two of the bigger ones have now been taken off the table,” said the host of “Mad Money” after the Dow Jones Industrial Average and S&P 500 broke four. consecutive losing streaks.
A resolution came from the Federal Reserve, which kept its monetary policy very accommodative after the central bank’s political arm held a two-day meeting. This meant that investors who feared the Fed would announce a policy tightening due to high inflation were wrong and had to react, Cramer said.
“If you were one of the inflation hawks who thought the Fed should take a hard line today, then you should buy stocks now because [Fed Chairman Jerome] Powell… allayed the concerns, ”Cramer said, explaining that fund managers cannot“ refuse to buy stocks ”simply because they don’t agree with the Fed chief’s policy.
“They have investors and these investors will not forgive them for sitting on a rally that they don’t think should happen,” he said.
Cramer said the second concern was resolved in China, when struggling real estate developer Evergrande indicated it would make a payment to onshore bondholders. Earlier this week, Wall Street became increasingly concerned about the financial contagion resulting from a possible default by Evergrande on its significant debt.
“Evergrande has another big bill to pay tomorrow, the one they owe the foreign bondholders. Most of these foreign bond buyers come from countries that are totally hooked on China,” Cramer said. “So they’re not going to worry about those obligations. They’re just going to take the hit,” he added. “That’s why, despite what you’ve heard in the press, Evergrande’s risk has never really been systemic because everyone wants to do business with China, so they’re just willing to ignore the losses. “
Cramer has been cautious in the market in recent weeks during a historically difficult period for stocks. The “Mad Money” host said he sees a lot of risks hanging over Wall Street and believes many of them need to be addressed before the market can significantly shake off its September woes. .