CNBC’s Jim Cramer on Thursday warned investors against rushing to empty or bolster their portfolios based on moves outside of normal US trading hours.
“Don’t pay attention to what the future [are] To do. Be careful what you like,” Cramer said on “Squawk Box,” before shares opened higher on Thursday. they shouldn’t [be] because the machines erase them.”
The “Mad Money” host has previously ridiculed those he calls “pajama traders” for influencing premarket sentiment as they trade futures, often based on securities and algorithms. His comments on Thursday came as U.S. stock futures pointed to a positive open at the 9:30 a.m. ET opening bell. However, futures had fallen sharply at one point in overnight trading.
“Why are people so desperate to sell at 1am? What do they know? Cramer asked rhetorically. “The answer is nothing,” he argued.
The recent stock market volatility comes as Wall Street watches closely the Federal Reserve, which is in the process of withdrawing some of the very accommodative monetary policy support it put in place nearly two years ago at the start of the Covid pandemic.
On Wednesday, the US central bank signaled that an interest rate hike is likely in March amid already volatile markets and runaway inflation. The Dow Jones Industrial Average closed down about 130 points on Wednesday following comments from Fed Chief Jerome Powell on the Fed’s January meeting after being in the green earlier in the day.
The 30-stock Dow Jones rose 0.7% midday Thursday on the heels of a fourth-quarter U.S. GDP report that beat analysts’ expectations. The S&P 500 rose 0.4% and the technology-focused Nasdaq Composite fell 0.1%.
Once again criticizing what he calls bot-generated headlines, Cramer said Thursday he thinks any market hysteria over Fed actions should be taken with a grain of salt, as some of the stocks trading are conducted by algorithmic traders who “do not distinguish between good and bad actions.
“They’re just selling out,” Cramer said, urging people “not to pay” for their favorite businesses right now.
“I think there are a lot of people trying to buy something way above what the sellers are willing to sell because it’s automatic,” Cramer said. “Selling programs exceed buying.”
“That doesn’t mean the stocks are bad, it just means you should be a little more careful and not bid that close,” he continued.
— Register now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.