Cramer looks at Disney’s post-earnings stock move to explain Wall Street dynamics

As the major averages declined Wednesday, failing to recover fully from the brutal early week sell-off, CNBC’s Jim Cramer explained the current dynamics and attitudes at play on Wall Street. He used Disney‘s post-earnings stock performance to explain how investors want rate cuts but are also concerned by a lack of consumer spending.

“You can’t hope for rate cuts from the Federal Reserve and also expect zero weakness in any part of the economy that impacts your portfolio,” he said. “Wall Street wants to have it both ways, but we’ll never get those rate cuts until the Fed sees cash-strapped consumers rebelling against higher prices, forcing companies to roll them back to pre-Covid levels.”

Disney topped Wall Street’s expectations for earnings and revenue, with management touting its streaming services’ performance and profitability. However, the company also indicated its theme parks business was affected by inflation and lessened consumer demand. Disney CFO Hugh Johnston said the business saw a “slight moderation in demand,” adding that it was “a bit of a slowdown that’s being more than offset by the entertainment business.”

By Wednesday’s close, Disney shares had dropped 4.46%.

To Cramer, this situation is emblematic of the issues many other companies face as consumers become more selective about spending. But he said he’s confident the Fed will cut rates, which could take the pressure off consumers. He added that the company’s parks haven’t lost their relevance, they’re just more expensive than other leisure options. Cramer also suggested that Disney may have the ability to reduce prices because of the success of other parts of the business, adding that even if the Fed cuts rates, consumers may still demand lower prices.

“The Fed can rejoice and stretch the time before it cuts rates until it sees the Disneys of the world cut prices en masse, or it can anticipate what’s going to happen and move now,” he said.

Disney did not respond immediately to a request for comment.

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Disney