CNBC’s Wednesday segment featured Jim Cramer discussing the Dow Jones Utility Average, which has been steadily rising since April 16. Cramer pointed out that utilities tend to perform well in a slowing economy, and their recent rally suggests this trend is continuing.
The Dow Jones Utility Average consists of 15 major utilities stocks and has seen steady growth in recent weeks, finishing up 0.54% on Wednesday. Utilities are not necessarily market leaders as they rely heavily on debt financing for their operations, especially to support the growth of data centers.
Cramer highlighted that if interest rates were increasing, utility stocks would likely suffer, but that is not currently the case. He reiterated his belief that signs of a slowing economy have been emerging in recent weeks, and the surge in utilities further supports this theory. Cramer also suggested that Federal Reserve Chair Jerome Powell’s comments in April may have contributed to the economic slowdown by indicating fewer interest rate cuts than expected.
In conclusion, Cramer emphasized the importance of paying attention to utilities as an indicator of economic trends, stating that their steady rally points to potential slowdown ahead. He advised investors to adjust their strategies accordingly and keep an eye on economic signals coming from this sector.
