Cramer’s Dire Warning: “1987 Crash” Scenario Looms
CNBC’s Jim Cramer has issued an alarming warning that Wall Street could face a catastrophic “Black Monday” scenario comparable to the historic 1987 crash if President Donald Trump doesn’t reverse course on his sweeping new tariff policies. The veteran market commentator’s concerns come as markets suffered their worst two-day plunge since the early days of the COVID-19 pandemic.
“If the president doesn’t try to reach out and reward these countries and companies that play by the rules, then the 1987 scenario… the one where we went down three days and then down 22% on Monday, has the most cogency,” Cramer cautioned viewers, according to The Street. “We will not have to wait too long to know. We will know it by Monday.”
The market’s reaction to Trump’s April 2 tariff announcement has been swift and severe. The Dow Jones Industrial Average plummeted 2,231 points on Friday following a 1,679-point drop on Thursday. The S&P 500 surrendered nearly 10% in just two days, closing 17.4% below its February high – placing the current decline in the same category as the 1987 crash, the 2008 financial crisis, and the 2020 pandemic panic.
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Trump Tariffs Trigger Historic Selloff
President Trump unveiled a 10% blanket tariff on all imports, with higher levies targeting specific countries set to take effect April 9 – including 34% on Chinese goods and 26% on imports from India. China’s swift retaliatory tariffs intensified fears of an escalating global trade war, sending financial markets into a tailspin.
Friday’s session was particularly brutal, with the market dropping 6% straight into the close despite repeated attempts to find support. Even traditional safe havens offered little protection – gold fell over 2%, utilities plunged 5.5%, and Warren Buffett’s Berkshire Hathaway shed almost 7%.
On Saturday morning, Cramer took to social media platform X with an even more pointed warning: “It’s tough to build a new, weaker, world order on the fly. Frantically trying to do it but don’t see anything yet that takes the October 87 scenario off the table yet. Those who bottom-fished are sleeping with the fishes…so far,” Mitrade reported.
NEW: Jim Cramer warns of a 1987 "Black Monday" style stock market crash on Monday, says he is about to be super mad.
— Collin Rugg (@CollinRugg) April 5, 2025
"Black Monday" was a global stock market crash where the Dow Jones tanked almost 23% in a single day.
"If the president doesn't try to reach out and reward these… pic.twitter.com/aPwnFzdXBA
Echoes of Black Monday
Cramer’s references to “Black Monday” evoke one of the most traumatic days in Wall Street history. On October 19, 1987, the Dow Jones Industrial Average collapsed 22.6% in a single session – its worst one-day percentage drop ever. That crash was triggered by a perfect storm of high valuations, rising interest rates, geopolitical tensions, and computerized trading that created a self-reinforcing selling cascade.
Today’s market faces its own unique challenges. “The direction of the market depends on what Trump does next,” Cramer emphasized Friday night. “If President Trump stays intransigent and does nothing to ameliorate the damage that I saw these last few days, I’m not going to be constructive here.”
Market analysts echo these concerns. Jim Paulsen from Paulsen Perspectives criticized the economic logic behind the tariff rates: “A massive tax increase on the entire global economy at this point doesn’t make much sense. And I think it doesn’t make much sense for the Fed to stubbornly not want to ease.”
Fed Position Complicates Response
Federal Reserve Chair Jerome Powell may have exacerbated market tensions with his Friday statement that he’s in “no hurry” to cut interest rates, citing persistent inflation expectations. Investors interpreted this as a signal that monetary relief won’t arrive unless conditions deteriorate further.
Bespoke Investment Group described the situation succinctly: “The stock market is rudderless.” They noted that despite Friday’s job report showing no signs of economic collapse, market sentiment has completely shifted: “The only thing that matters at this point rests on the decision of one man’s Truth Social account.”
Some potential stabilizing factors exist. The 10-year Treasury yield has dropped from 4.8% in January to 4%, the dollar is weakening, and oil has fallen to $60 per barrel – all of which could provide a counterbalancing economic stimulus.
Despite his dire warnings, Cramer offered a personal perspective on weathering market storms: “I will contain my anger, but only because I lived through ’87 and in the end, I came out okay. I was in cash for the crash. I know what this feels like.”
As investors brace for Monday’s opening bell, all eyes remain fixed on any signals from the White House that might indicate a potential softening of the administration’s trade stance before the higher tariff rates take effect April 9.
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