CNBC's Jim Cramer on Thursday highlighted weakness in sectors he previously considered bullish, saying pervasive bearishness will constrain any potential market rally.
"The bear is roaming free right now except in tech. It's irrepressible," Cramer said. "And without more sectors changing their coloration, any rally will still be constrained beyond a short oversold pop, unless employment cools, wage growth goes negative, and interest rates finally retreat from their record run higher."
Cramer said the market keeps losing "buyable groups" as formerly well-performing sectors go flat, adding that there aren't enough companies with strong prospects.
He first pointed to the travel and leisure sector, which previously saw success post-Covid, with airlines, hotels and restaurant stocks running high. But in the last few weeks, Cramer said, the rise in fuel costs and decreased disposable income due to tightening credit has obliterated such a bullish thesis in much of Wall Street.
To Cramer, these travel and leisure stocks are viewed as part of the "post-Covid hangover cohort."
The housing bull market may also be over, Cramer said. The demand for housing allowed home builders to increase prices, but while demand continues, rising mortgage rates have priced out a substantial number of people, he added. Cramer also noted weakness in the utilities sector, saying their dividends are too small to compete with bonds and they need to frequently borrow money.
Banks are also doing poorly as high interest rates persist, Cramer said, adding that regional banks seem especially "doomed."
"Now, of course, if we get a different interest rate environment, some of these bear markets can turn into bull markets," he said. "We've lost a ton of groups and in their places, we've picked up none. Only tech has a real bull thesis right now and many feel that that's already overdone because they don't think that AI can be that powerful. I think it can be. I think it's attractive."
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