Jim Cramer says potential stock market bottom is tied to interest rates, not war headlines
CNBC’s Jim Cramer said investors shouldn’t get comfortable looking for the bottom of the market just yet, because the real driver of this market is interest rates, not geopolitics.
On Monday, Cramer noted that the S&P 500 may have bottomed last Monday, March 30, but emphasized that the turning point wasn’t “anything related to stocks” during “Mad Money.” Instead, he stated that it was due to interest rates. Bond yields pulled back sharply after Federal Reserve Chairman Jerome Powell signaled in a speech at Harvard University last week that the central bank would stop raising interest rates despite higher oil prices.
“That’s how important Powell’s comments were,” Cramer said, noting their impact on bonds, oil and, most importantly, stocks.
The shift in expectations helped stocks stabilize even as tensions in the Middle East escalated. Cramer emphasized that headlines about Iran, oil prices or even potential disruptions in the Strait of Hormuz did not determine last week’s rise, but rates did.
“If rates were set to rise,” he warned, pointing to the fragility of interest-sensitive sectors such as housing, banks and utilities, “we would start a bear market of pretty significant rates.”
Of course, Cramer said the market still faces meaningful risks. Inflation pressures remain high, geopolitical tensions persist, and companies may soon begin issuing weaker outlooks as earnings season ramps up.
He said the real test will come in the coming weeks as more companies report results. While this week has been relatively light, earnings could reveal the true economic impact of higher energy costs and ongoing uncertainty.
As a result, Cramer said, “The bond market is under the control of the stock market, even in wartime.”
