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CNBC’s Jim Cramer said Tuesday stocks may struggle to sustain their recent gains unless the bond market cooperates.
“This stock market won’t be able to rally for long without the oxygen of lower interest rates,” the “Mad Money” host said.
The consumer price index came in hotter than expected Tuesday, with prices rising a seasonally adjusted 0.6% in April, pushing the annual inflation rate to 3.8%. The report sent Treasury yields higher, with the 2-year yield briefly touching 4% as investors dialed back expectations for future Federal Reserve rate cuts. Hotter inflation makes it harder for the Fed to cut rates because policymakers typically keep borrowing costs elevated to prevent prices from rising too quickly.
While Tuesday’s rotation into previously beaten-down sectors like healthcare was encouraging, Cramer said lasting gains will be difficult without lower rates.
