Market could hit ‘investable’ bottom after analysts cut earnings estimates, says Jim Cramer

CNBC’s Jim Cramer said Thursday that a possible upcoming series of cuts in earnings estimates by analysts could trigger a sell-off and an opportunity for investors to buy.

“In the coming weeks, before the earnings season kicks off, I expect the analysts will hit us with some preemptive cuts in estimates, while more companies will hit us with negative advances,” he said.

“That’s going to be bad for the averages, but once the sell-off hits and we’re over budget cuts for 2022 and 2023, that’s it. That’s when we don’t have a tradable bottom like this one, but an investable bottom,” he added. .

The “Mad Money” host’s comments come after a turbulent inflation-dominated earnings season saw companies fail to live up to Wall Street’s expectations.

Cramer said he believes analysts’ consensus expectations for stocks in the S&P 500 are too high, and they should come down because markets don’t fall unless bad news is baked into stock prices.

“They’re forecasting 8% growth, followed by 11% next year. I can’t believe that. Eight to 11 percent earnings growth is really what you’d expect in an average year,” he said.

He pointed out that in recent weeks there have been several companies reporting great quarters but disappointing prospects.

“You had really great quarters, but they say things are getting weaker. People like them because they think the cuts are finally done. I’m not sure,” he said.

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