Jim Cramer Predicts No 'Huge Run' For Tech Stocks After Federal Reserve Cuts Rate: 'It Got Out Of The Wish Game A Very Long Time Ago'

BY Benzinga | ECONOMIC | 09/19/24 04:25 AM EDT

Amid the Federal Reserve’s recent decision to cut interest rates, CNBC’s Jim Cramer has weighed in on how these changes might affect the technology sector.

What Happened: Cramer discussed the Federal Reserve’s recent interest rate cuts and their implications for the technology sector on Wednesday. He believes these cuts do not significantly benefit tech stocks.

According to CNBC on Thursday, Cramer stated, “With a double-sized rate cut that everybody already expected, you aren’t going to see a huge run in tech.”

He emphasized that the Fed’s actions are more beneficial to companies reliant on a healthy consumer base.

The Federal Reserve initiated its rate-cutting cycle by reducing rates by half a point and signaled an additional 50 basis points cut by year-end. This marks the first rate cut since the pandemic, aimed at addressing inflation and balancing economic risks.

Cramer highlighted his observations from Salesforce Inc. (CRM) ’s annual conference in San Francisco, noting that tech companies, particularly those focused on AI, are less impacted by rate cuts. These companies cater to enterprises rather than consumers, distancing them from the labor market.

See Also: Ethereum Co-Founder Says Donald Trump Is ‘Certainly The Favorite’ Over Kamala Harris For Crypto

He suggested that consumer-oriented companies might benefit more during this rate-cutting cycle. Despite potential gains for tech stocks, Cramer noted that Wall Street often shifts focus to companies that thrive with lower rates.

Cramer concluded, “On days like today, we want the companies that desperately needed a rate cut, because they just got what they wished for. But tech? It got out of the wish game a very long time ago.”

Why It Matters: The Federal Reserve’s decision to cut interest rates by 50 basis points marks a significant shift in monetary policy, breaking a streak of 12 consecutive months with rates held steady. This move aims to address inflation and balance economic risks. The rate cut has already impacted market sentiment, with the CNN Money Fear and Greed index showing improvement, moving into the “Greed” zone.

Price Action: Invesco QQQ Trust, Series 1 (QQQ) , which tracks tech players like Apple Inc. (AAPL) , Microsoft Corp. (MSFT) , Nvidia Corp. (NVDA) , Broadcom Inc. (AVGO) and others, was trading 1.67% higher during the pre-market at $479.33?while it closed at $471.44, as per Benzinga Pro.

Read Next:

  • Shiba Inu Team Says Launching K9 Finance Liquid Staking On Shibarium Tomorrow: Are SHIB Burns Set To Accelerate From Here On Now?

Image via Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article