CNBC’s Jim Cramer said Wednesday that he thought some stocks were rallying too far too quickly given the high level of unemployment in the United States as the economy tries to pull out of the coronavirus slowdown.
“It’s too ‘happy days are here again,'” Cramer said on “Squawk on the Street.” “It’s just not going to work like that. Not with 38 million unemployed.”
Stocks that would benefit from a faster economic recovery jumped on Wednesday as the Dow Jones Industrial Average surged more than 300 points in the opening minutes. Some of the biggest gainers were beaten-down airlines and cruise lines, with American Airlines and Carnival both jumping 8% early. But by late morning, the Dow was giving up much of those gains.
“You can’t keep building on a castle of sand. I see a lot of quicksand underneath some moves. I wish we would just calm down and digest some of these things,” Cramer said.
Since government officials around the country began shutting down nonessential businesses to slow the spread of the coronavirus pandemic, unemployment has risen at a record rate. New jobless claims have surpassed 38 million, continuing to grow after April’s unemployment reading showed 14.7% of the workforce without jobs.
The stock market sold off beginning in late February, before unemployment began to spike. The market has rallied from its low point in late March. The tech-heavy Nasdaq has turned positive for the year, while the S&P 500 has lost more than 6% and the Dow is down more than 11%.