CNBC’s Jim Cramer on Wednesday told investors to be patient as stocks sold off due to rising bond yields and uncertainty about the federal budget, saying the market will recover when the budget bill is passed.
“We’re in the thick of it right now. The budget deficit is front and center. Hence the reckoning,” he said. “When we finish the budget negotiations and we get some big beautiful bill, people will start focusing on how the tax cuts should be great for growth.”
The Dow Jones Industrial Average sank 1.91%, The S&P 500 lost 1.61% and the Nasdaq Composite shed 1.41% as Wall Street worried the new bill would worsen the U.S.’s already massive deficit. The bill aims to add tax cuts and make permanent cuts President Donald Trump imposed during his first term. But it’s been stalled in Congress as factions of Republican lawmakers quarrel over the measures.
Cramer said that once the bill is passed, investors will stop worrying about a “reckoning,” and instead discuss how “we’re going to grow our way out of the deficit.” While he believes that the bill is inflationary, he said it has the potential to energize the economy. According to Cramer, the U.S. is so wealthy that it can “kick the can down the road for decades before the national debt blows up in our face.”
When the bond market starts to settle, he continued, buyers will return. Earnings season showed that there are many companies performing well against the current economic backdrop, Cramer said, even though their stocks have declined alongside weaker outfits.
He recognized that the present moment is stressful as the market tries to digest higher rates, lower taxes, new tariffs that threaten global trade, as well as the potential for rising inflation and less consumer spending. Right now, Wall Street is only feeling the negative effects of these economic changes, and “these can be replaced much more easily than it feels right now,” he added.
“Patience,” Cramer said. “Better prices are coming, I can promise you that.”
