CNBC’s Jim Cramer on Wednesday said that investors should judge stocks individually rather than on fears of a looming recession, after the Federal Reserve indicated it could start taking a softer approach to raising interest rates.
“The Fed looks to be out of the way until the next meeting in September — maybe they’re ahead of the game, even — with the data starting to go their way,” the “Mad Money” host said.
“So, let’s go case by case and I bet that with a softer background, the best earnings will be rewarded with higher stock prices, while the declines in everything else at last could be more muted,” he added.
The Fed raised interest rates by 0.75 percentage point on Wednesday in an effort to tamp down inflation. Chairman Jerome Powell said in a press conference that the central bank could raise interest rates by another 0.75 percentage point in September, but that decision hinges on what the economic data shows.
All the major averages closed up for the day, with tech names leading the way after Alphabet and Microsoft missed on earnings and revenue but still reported better-than-feared results elsewhere.
Cramer theorized that the Fed will be able to engineer a soft landing by taking a data-driven approach.
“We now know that Powell doesn’t want to cause a recession and doesn’t think he needs to cause a recession, so there’s an advantage for the bulls here, especially because he’s caught up to the curve and may be past it,” he said.
Disclosure: Cramer’s Charitable Trust owns shares of Alphabet and Microsoft.