Fed Rate Cut Fuels Global Market Rally, Dow and S&P 500 Hit Record Highs 9/19/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:08)

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with David Faber at post night of the New York Stock Exchange. Cramer's at one market in San Francisco, continuing his big week out west. Futures come alive on what looks to be the biggest gap higher after a Fed Day in more than a decade. S&P should hit some all-time highs at the open, above 5,700. Jobless claims meantime a four-month low. Roadmap begins though with that big Fed rate cut, sending stocks soaring in the pre-market. One Fed governor voting against the decision, the first official to do so since 5

David Faber (0:39)

Plus our fears of an iPhone. Sales slow down overblown. One major wireless carrier saying the first week of sales came in better than last year's. And I'll garden, Perrin, Darden Restaurants, it missed earnings expectations, but stock is rallying big time. Best name on the S&P ahead of the market open.

Carl Quintanilla (0:58)

Let's get to global markets today, rallying after the rate cut yesterday. During his news conference, the Fed chair stressed the word recalibration. Take a listen.

SPEAKER_4 (1:09)

With an appropriate recalibration of our policy stance, strength in the labor market can be maintained. This recalibration of our policy stance, it's a process of recalibrating. To recalibrate, we're recalibrating policy, recalibration of our policy, begin to recalibrate, recalibrating it. We're recalibrating our policy over time to a stance that will be more neutral.

Carl Quintanilla (1:33)

Jim, I think the JP Morgan note is titled, Recalibration Nation.

Jim Cramer (1:38)

Look, that makes sense. The first move after rate hike often has to be, rate cut has to be faded. And I'll tell you why.

Because people suddenly say, Uh-oh, 50 And then there are other people who say 50 is not enough. And then there are people who just say, You know what? This takes away from further cuts down the year. All these people are wrong. What history says is that you buy the first cut. It doesn't say you buy the first cut 25 or 25.50. You just buy it. And I think people are still too bearish when I see that action. David, when you have something so monumental as the 50 basis point, and people yawn, you don't yawn. And you don't just watch the people yawn. You do something.

David Faber (2:18)

All right. Meaning what, Jim?

Jim Cramer (2:21)

Well, when rates come down, stocks are cheaper. Particularly when you have 50 basis points, because finally you might get some money from the sidelines because it's not as attractive. And we saw the homebuilder stocks being lifted again today because mortgage rates going down would help affordability. Housing got too expensive, and the only thing that's going to make it give, if they actually, it's because if they lower mortgage rates, then we get more transactions.

David Faber (2:45)

But wait a minute, I hear you wrong, but did you say to fade the first move or no? What did you just say at the very top?

Jim Cramer (2:50)

The first move yesterday was to say, you know, this didn't do anything at all. Nothing changed. As a matter of fact-

David Faber (2:57)

Oh, you're talking about that. Okay, not about this rally we're seeing this morning.

Jim Cramer (3:01)

No, no, no. This is a real rally. This makes sense.

David Faber (3:04)

This is what should have happened yesterday. Yep. Money on the sidelines, really?

We're going to go with that already? Money on the sidelines? We're going to go with that one?

Jim Cramer (3:12)

Absolutely. Yeah, because there's a lot.

David Faber (3:13)

Oh, it's coming.

Jim Cramer (3:15)

Well, yeah, it is. Because, look, you're going to anticipate just having your money in some money fund and have it go. Who would ever sit there and take a beating in their money fund? It's not right. The money is going to go elsewhere. It can go to stocks that have good dividends. Darden.

Carl Quintanilla (3:32)

Yeah, we're going to get to Darden in a bit. A great line out of the JPM desk today, Jim. Over the past 40 years, the Fed has cut rates 12 times where the S&P has been within 1% of all time highs. And all 12 times, you're higher a year later, average return 15%.

Jim Cramer (3:49)

Look, we obviously weren't targeting employment. We were targeting almost entirely inflation in this 2%. And they are, the Fed is just determined to get at that level. So I think that we have to sit back and say, you know what, the Fed's working for us. The Fed isn't trying to work for us, but the Fed is working for us.