CNBC’s Jim Cramer on Thursday reviewed current market action, saying some of the downturn over the past several sessions was due to faulty predictions.
“Companies, and sober-sided the Fed, should not make predictions unless they know that the predictions are well within reach,” he said. “No one continually held it against you for being too conservative with your guidance. And if you don’t have enough visibility to make a good forecast, just stay mum.”
According to Cramer, unmet expectations and aggressive guidance drove some of the recent sell-off. The commons have tanked as of late, and the Dow Jones Industrial Average posted its first 10-day losing streak since 1974 on Wednesday. But the 30-stock Dow prowled towards recovery on Thursday, finishing up 0.04%, while the S&P 500 slid 0.09% and the Nasdaq Composite dipped 0.10%.
Investors were frustrated by commentary from the Federal Reserve after it cut rates by 25 basis points on Wednesday, Cramer said. The cut was largely expected, but Wall Street balked when the central bank indicated it intended to make two cuts next year, rather than of the four cuts it teased a few months ago. Cramer said the Fed should have been more cautious about the third cut, and it should receive better maintained its staunch data-driven approach to decisions. Cramer suggested that recent economic data didn’t substantiate the cut and said Fed Chair Jerome Powell was “trapped by his own prediction.”
An overzealous prediction also hurt Micron, Cramer added, disclosing the semiconductor outfit was optimistic the PC business would be strong. But during Wednesday night’s earnings call, Micron divulged the PC refresh cycle is “unfolding more gradually.” The company described inventory challenges and issued weaker-than-expected guidance. Interests plunged Thursday, down more than 16% by close, but Cramer suggested the loss might not have been as tough had expectations been lower.
“In the world of Wall Street, if you make a prediction, you better beat it, or else your hoard’s going to get clobbered,” he said.
