Jim Cramer: A rate cut won't get people to go out

CNBC's Jim Cramer reacts to a surprise rate cut of 50 basis points as the Fed tries to curb the economic effects of coronavirus.

Stocks fell sharply in volatile trading on Tuesday as an emergency rate cut by the Federal Reserve failed to assuage concerns of slower economic growth due to the coronavirus outbreak.

The decision to cut rates by half a percentage point came two weeks before the Fed’s scheduled meeting as the central bank felt it was necessary to act quickly to combat the effect of the virus spreading worldwide. It’s the first such emergency action coming in between scheduled meetings since the financial crisis.

The Dow Jones Industrial Average closed 785.91 points lower, or nearly 3%, to 25,917.41; it rose more than 300 points earlier in the day. The 30-stock average gyrated between sharp gains and solid losses after the decision was announced. The S&P 500 fell 2.8% to 3,003.37 while the Nasdaq Composite pulled back 3% to 8,684.09.

Investors, in turn, loaded up on U.S. Treasurys, pushing the benchmark 10-year yield below 1% for the first time ever. Gold, meanwhile, jumped 2.9% to settle at $1,644.40 per ounce.

“It’s great that the Federal Reserve recognizes that there’s going to be weakness, but it makes me feel, wow, the weakness must be much more than I thought,” CNBC’s Jim Cramer said on “Squawk on the Street” right after the sudden cut. “I’m now nervous. I’m more nervous than I was before.”

Traders had already priced in a rate cut of 50 basis points by this month’s policy meeting. Fed Chairman Jerome Powell noted the central bank was not prepared to use any additional tools to stimulate the economy aside from rate cuts. This may have disappointed some on Wall Street who were expecting something more from the central bank.

Bank shares fell broadly as the benchmark 10-year Treasury yield hit a record low. Bank of America dropped more than 5.5% while JPMorgan Chase and Citigroup slid 3.8% each. The 10-year rate hit a low of 0.906%.

“The market is still trying to find its footing,” said Adam Crisafulli, founder of Vital Knowledge, in a note. “The panicked collapse of the last week isn’t something that will be quickly forgotten, and it will take a couple of weeks (at least) before stocks are on firmer ground.”



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[teresaharris-travelbybooks]

I've stopped going out, for the last two weeks. I don't leave the house, except for a very few necessary things. No more visits to theaters or stores, or areas with more than a handful of people.

[billspencer]

Rate cut ? Why is that, don't we have the strongest economy - ever ?
Nothing screams total outright panic as a good 0.5% rate cut.
Pathetic.

[marcodimas]

Just showed us how weak the economy really is with this cut!

[RishabDhar]

Isn't this the same clown that was jumping around yesterday saying yay the fatality rate is only 1.4%? What is his credibility. As per SEC regulations this clown should be sued.

[avandurion]

"surprise rate cut" yeah right, u could see it coming yesterday.

[felipegomez]

this isnt a surprise cut, the surprise was doing it at a convenient time this morning. this guy Lieseman has been crying rate cuts for days and now he got it and markets are down. rate cuts are not going to save this falling economy. it will only lead to inflation. these people are so conditioned to looking at the Fed for help when markets fall.

[anthonycbrown]

You want to see the markets stabilize? 1) Get the president to not speak on medical issues he does not understand as it incites worry. 2) Place a military medical doctor in charge of the Coronavirus effort and push the VP to the side as he is a follower not a leader. 3) Incentivize manufacturers to create an extra shifts / overtime to resupply core staples and ensure the supply chains are abundant (this is a health war) 4) Give manufacturers of health-related products the incentive to bring manufacturing back to the USA for at least half of the nations needs. 5) Encourage employers to allow staff to work from home (when possible) until the situation improves


Maybe the financial folks know if we start restricting travel and banning major public events with large crowds the US financial market will not survive. Otherwise, we are just dancing around the obvious - prepare to shelter in-place.

[statimauditor]

So we can print currency and inject liquidity overnight in the tune of 80 billion however printing 4-5 billion providing 130 million working adults 30k of income for a 3 month quarantine for this humanitarian crisis seems so crazy you r so greedy what's the matter not enough death to do that

[SpockvsMcCoy]

Elderly people have a lot to worry about. China states that 15 percent of people in their 80s who catch Coronavirus have died and people in their 70s around half that rate. Elderly retired people don't have a job or educational classes to go to. Expect them to panic buy necessities now then cocoon themselves at home, regardless if there is a quarantine, and NOT spend money on discretionary purchases. That is bad news for a 70 percent consumer economy. How is a rate cut by the Fed going to convince terrified elderly people to leave their homes?

[Reallifenewz]

Finally someone mentioned the real problem. No production from the supplier for months. They are still only taking orders. Prices will double at the least and that’s if products are even available! Won’t be long. Way worse than 2008.

[donaldrobinson]

It’s time for the fed to grow a pair and not be intimidated by our president. This cut has only made things worse not better. We now have a confidence problem .

[peacefulpeaceful]

The virus has spread dramatically all over the states the past month. Just don't have the test. Everyone is going to stay home be safe and save😬

[lawrencesullivan]

consumers need not "go out" as there is something that's called Amazon which you can do sitting in a chair with your computer or I phone---and then think of all the gas will be saved. Chinese are staying home and have clear skies and non-polluted air with rates of other respiratory diseases dropping

[jeremiahlim]

I challenge all to short DOW index now as coronavirus which is 96% identical in DNA to Sars is burning out and dying in HK and Singapore just like Sars in 2003.

[libertysprings]

I love her hair and outfit (I'm a girl BTW). So pretty.

[bob___]

Anecdotal evidence of the degree of panic in everyday life: This weekend, the local Target was surprisingly empty, but they had unsurprisingly sold out of hand sanitizer. Today, the local Target was less empty but not packed, and the shelves were shockingly empty. Not only was there more than 10 linear feet of completely empty shelf space, four shelves high, where the cleaning wipes used to be, but a surprising amount of food was gone (no bananas) with a lot of gaps in the shelf space. These are stay-at-home products in the sense that the kind of things people buy before a major snowstorm are stay-at-home products. This kind of panic could almost be as unhealthy as coronavirus.

[angelvineatta]

we need to focus on coronavirus fight for your safety health rather than economy it is better to cut. We respect coronavirus very necessarily farther than the economy what the Fed told us just listen and accept it

[teebone]

People saving money is a threat to the economy LOL this is a broken system. Seems like they need us all as debt slaves to keep the goverment lights on

[fmuscatw]

there is never any new insight from Cramer. He says whatever I read in the newspaper. It’s for people who don’t read the WSJ. Its like someone reading out the WSJ in a loud voice.

[garry]

They'll go out home shopping I can guarantee you that much. I own real estate. Monthly cash flow is KING