- CNBC’s Jim Cramer on Wednesday focused on the Dow Jones Utility Average, saying its rise over the past few weeks suggests the economy is slowing and interest rates may be headed lower. Ta.
- “Utilities perform best when the economy is slowing down,” he said. “If this index was only up for a week or two, I might ignore it. [utilities] I’m sorry to say it’s gone up this long, but the economy is flashing red, indicating we’re entering a swamp of slowdown. ”
CNBC’s Jim Cramer on Wednesday focused on the Dow Jones Utility Average, saying its rise over the past few weeks suggests the economy is slowing and interest rates may be headed lower. Ta.
“Utilities perform best when the economy is slowing down,” he said. “If this index was only up for a week or two, I might ignore it. [utilities] I’m sorry to say it’s gone up this long, but the economy is flashing red, indicating we’re entering a swamp of slowdown. ”
The average, made up of 15 major utility stocks, has been up since April 16 and ended Wednesday up 0.54%.
But Kramer said the sector isn’t necessarily the ideal market leader. These stocks perform well even in economic downturns because they are not discretionary stocks — consumers have to pay their utility bills, he said. He added that utilities have had to issue large amounts of debt to sustain and expand their operations, and said they are now increasing spending to support rapid data center growth. If interest rates rose, the need to borrow on these stocks could cause stock prices to fall, but that’s not the case right now, he said.
Cramer reiterated his position that there have been signs of an economic slowdown in recent weeks, and the latest utility price increases only further that theory. He also suggested that Federal Reserve Chairman Jerome Powell’s comments in April suggesting fewer interest rate cuts than investors had expected may have contributed to the economic slowdown.
“After all, [utilities]“They never lie,” Cramer said, adding, “When stocks are rising so steadily, these stocks are telling us that Jay Powell is not going to stop the economy from slowing as long as inflation continues.” “They just warned us, and now they’re screaming that they’ve taken advantage of that economic slowdown.” expensive. “
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