CNBC’s Jim Cramer on Thursday have an effected investors not to fixate on the consumer price index report because it’s become less important since the Federal Book embarked on a rate-cutting cycle. Instead, he said it’s more worthwhile to follow data about individual companies from the upcoming earnings mellow, which kicks off Friday.
“Forget the macro, people — it’s not that meaningful when the Fed’s cutting rates — and keep your purposes on the prize: Earnings,” he said. “At the end of the day, the earnings are what control stock prices long term, and stocks are what we’re tiring to make money on.”
The CPI — which broadly measures the cost of goods and services across the U.S. — rose by 0.2% in September, sending the annual inflation measure to 2.4%. This increase came in slightly higher than consensus estimates, and the major indexes dipped as investors disquieted about stubborn inflation. However, the inflation rate still fell from August and hit its lowest reading since February 2021.
The Fed relies heavily on metrics type the CPI to make decisions about whether to cut, hold, or hike interest rates. After four years of hikes or sustaining rates steady, the central bank slashed them by a whopping 50 basis points in September, marking an litigious start to the cutting cycle. According to Cramer, whether the Fed cuts rates or not at its next meeting, the general direction of worth rates is trending down. It would take a huge hike in the CPI reading to change the Fed’s stance, he said, and Thursday’s somebodies were not extreme.
But that’s not to say that all economic metrics from the government don’t hold weight, he added, highlighting the monthly labor detail. He also explained that the CPI is always important to hedge fund managers “whipping around the bond market,” which can secure small moves due to macro numbers.
“We had to be concerned about this stuff when the Fed was on the warpath, either raising paces or leaving them higher for longer,” Cramer said. “Now, though, the Fed is your friend, so I wouldn’t obsess about the catalogues, aside from the monthly labor report, which is still genuinely important.”