Cramer warns a looming ‘stock glut’ will put more pressure on markets
CNBC’s Jim Cramer warned Thursday that investors should brace for more selling pressure as the market could be flooded with lots of new stock supply.
“We’re about to get hit with the last thing we need … a stock glut,” the “Mad Money” host said. “When you’ve got lots of new supply coming online at the same time … and not a lot new money to stoke demand, it puts a ton of pressure on the averages.”
The Nasdaq Composite has fallen nearly 8% over the past month, bearing the brunt of a market-wide sell-off as investors trim positions in tech and growth names amid rising interest rates and inflation uncertainty. The index is down 6.4% in the past three sessions alone.
Cramer noted the selling pressure could increase as new companies go public while insiders from businesses that made their public-market debut last year are able to sell their shares.
A lock-up period for Snowflake —which went public last year — ends on Friday. This will allow some early investors and executives to sell their shares. The stock has already fallen about 24% since its first lock-up expiration in December.
“The stock market is about to have a serious oversupply problem with no concomitant buybacks or dividends to fall back on this moment,” he said.
Cramer also highlighted lock-up periods ending later this month for GoodRx and Corsair Gaming later this month.
“Remember, these are just the beginning. There are more lockup expirations on the way, meaning more pressure for the stock market,” he said.
CNN Business/Anneken Tappe
One year into the pandemic, America is still down nearly 10 million jobs
The American job market is nowhere near fixed. Nearly one year into the pandemic, the nation is still down nearly 10 million jobs.
Another 745,000 Americans filed for first-time unemployment benefits on a seasonally adjusted basis last week, the Labor Department reported Thursday. It was a slightly smaller number of claims than economists had expected, but it was up from the prior week. And it’s still more than three times the number of claims in the same week last year.
On top of that, 436,696 workers applied for Pandemic Unemployment benefits, which are available to people like the self-employed or gig workers.
Together, first-time jobless claims stood at 1.2 million without seasonal adjustments last week.
In Texas claims rose by nearly 18,000 applications, likely reflecting the recent winter storms that devastated the state.
Continued benefit claims, which count applications submitted for at least two weeks in a row, stood at 4.3 million in the week ended February 20, down from the week before.
To be sure, the labor crisis is much improved from nearly a year ago, when weekly first-time benefit claims skyrocketed to 6.9 million and millions of jobs vanished. Many people have been able to return to work since, but the job market remains deep in a hole.
More than 18 million workers received benefits under the government’s various programs in the week ended February 13.
Other labor market data has been similarly sobering this week. The ADP employment report showed fewer jobs than expected were added in February: 117,000 versus the 177,000 forecast. Even though the private sector report and the government’s official figures, which are due Friday at 8:30 am ET, aren’t correlated, it’s not a great sign.
Economists predict 182,000 jobs were added in February, up from 49,000 added at the start of the year. If this holds true, America would still be down 9.7 million jobs from February 2020, when the unemployment rate was near a 50-year low of 3.5%.
Investor’s Business Daily/Nancy Gondo
Dow Jones Dives 700 Points As Powell Speech Slams Stock Market, Bond Yields Spike
The Dow Jones Industrial Average shed 700 points Thursday, after Fed Chief Jerome Powell’s speech boosted bond yields and sent stocks tumbling.
The Nasdaq dived 3.3%, the S&P 500 sank 2.5% and the Dow Jones industrials lost 2.3% in the stock market today. Small caps tracked by the Russell 2000 plunged 3.1%. Volume was higher on both major exchanges vs. the same time Wednesday.
Stocks were mixed after a better-than-expected jobs report showed 745,000 jobless claims filed the week ended Feb. 27. While that rose from the prior week’s revised 736,000, it was lower than Econoday’s forecast for 760,000.
But key indexes turned sharply lower midday, after Federal Reserve Chairman Jerome Powell said he expects economic reopening to cause inflation. But he said price increases likely won’t be significant enough to lead to higher interest rates.
“We expect that as the economy reopens and hopefully picks up, we will see inflation move up through base effects,” he said at the Wall Street Journal Jobs Summit. “That could create some upward pressure on prices.”
Following his comments, stocks headed south as the 10-year Treasury yield jumped to session highs above 1.53%. The yield briefly topped 1.6% last week.