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Jim Cramer: Stocks to Stage 'Rallies of All Rallies' If Fed Pauses Rate Hikes

Alexmillos | Dreamstime.com

By    |   Wednesday, 07 November 2018 03:05 PM

CNBC's Jim Cramer predicts that the stock market could surge to new record highs but the Federal Reserve must pause its plan to continuously hike interest rates.

With midterm election uncertainty over, the market "can get on with other worries," the "Mad Money" said on CNBC.

"If there's anyway, anyway that [Fed Chaiman] Jay Powell says, 'You know what, we got to wait and see,' we could have the rallies of all rallies," Cramer said. "But he has to green light us."

The Fed began its policy meeting on Wednesday facing a shifting political landscape but little in recent economic data to alter plans for an interest rate increase in December and more to come next year, Reuters reported.

The Fed is not expected to raise rates at its two-day session that ends Thursday, a meeting that follows a renewal of volatility in stock prices, tightening credit markets, and a spreading expectation that the U.S. economy will slow next year.

The Fed could flag a possible slowdown in the housing market and a dip in business investment as reason to think growth is ebbing. At the same time employment gains since the Fed's September meeting have been solid, as has household spending.

"We expect very few changes" from the Fed's September policy statement that characterized the economy as "rising at a strong rate," said JP Morgan economist Michael Feroli.

To be sure, U.S. stocks surged on Wednesday as investors piled into technology and healthcare sectors after midterm elections led to a divided Congress and fueled bets that tighter regulations in these sectors would be harder to push through.

The S&P technology sector rose 2.4 percent, while the healthcare group gained 2.8 percent as fears of stricter regulations curbing their growth eased.

“The uncertainty around the midterms is over, so the markets are rallying...we’re not expecting any major policy implications over the next two years,” Massud Ghaussy, senior analyst at Nasdaq IR Intelligence in New York, told Reuters.

“Certain sectors will benefit or stand to lose based on compromise reached between the House and the White House, but the overall market impact will be limited.”

While a divided Congress will hamper Trump’s political and economic agenda, few expect a reversal of corporate tax cuts and deregulation measures that have already been enacted, allowing investors to buy back into a market recovering from its worst month in seven years in October.

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Jim Cramer: Stocks to Stage 'Rallies of All Rallies' If Fed Pauses Rate Hikes
jim cramer, stocks, rallies, fed, rate, hikes
Wednesday, 07 November 2018 03:05 PM
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