CNBC’s Jim Cramer on Wednesday warned investors that stocks could continue to fall — at least in the near future.
“I think we have a … period of consolidation, as we get rid of the weak-handed investors. And we certainly wash out those who got carried away and committed personal fouls, like buying bitcoin above $20,000 or fooling around in meme stocks,” he said.
Stocks tumbled on Wednesday after December retail sales data heightened fears of a recession and investors took profits on gains from earlier this month. The S&P 500 closed at its lowest level since Dec. 15, and the Nasdaq Composite fell, breaking a seven-day win streak.
“Right now, the market’s working off one of the most overbought conditions we’ve had in ages. In the last two weeks, we simply rallied too far, too fast. It’s not that everything’s horrible,” Cramer said.
He pointed out that while Microsoft said that it’s laying off 10,000 employees, other industries have stayed much more resilient. Many companies, including United Airlines recently, have reported great quarters so far this earnings season, he added.
“Vast swaths of the economy are holding up just fine. The problem lies in tech, as I’ve been telling you for months on end,” he said.
However, that won’t stop the market from enduring more pain, at least in the short term, Cramer warned. “The bears — they will be out in full force tomorrow.”