Jim Cramer, the host of CNBC’s “Mad Money,” has attributed the recent market sell-off to poor decision-making by investors.
What Happened: Cramer stated that the sell-off on Tuesday was a result of “bad judgment” by shareholders, reported CNBC. He emphasized that the market won’t bottom out all at once and suggested that this sell-off was not due to poor earnings or a bad business environment.
The Dow Jones Industrial Average saw a 1.35% drop, its worst session since March. The S&P 500 and Nasdaq Composite also experienced significant declines.
"The market won't bottom all at once — there will be some stocks that will bottom tomorrow — but I think this is a sell-off based on bad judgment, not bad earnings or a bad business environment," he said.
"And it will be cured by the departure of those bulls who got caught offsides, who'll now be pulled from the lineup and sent back to the sidelines, where they can earn their 5% while they break form and do some much-needed homework."
Investors who had bought up tech companies with unclear business plans also contributed to the market froth. Cramer suggested that the sell-off could be an opportunity for investors to sell some stock and buy it back at lower levels.
Why It Matters: Wall Street witnessed one of the worst sessions since the beginning of the year on Tuesday. The market sell-off comes in the wake of a higher-than-expected inflation report, which has had a significant impact on Wall Street. The Consumer Price Index (CPI) rose at a 3.1% annual rate in January, surpassing expectations and causing traders to adjust their positions, lowering their expectations for rate cuts in 2024.
This has led to widespread declines across the board, with stocks being hit by the impact of the inflation report. The Magnificent Seven stocks, including Microsoft Corp., Apple Inc., Amazon Inc., and Tesla, Inc., saw a collective market capitalization dip below the $13 trillion mark.
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