Jim Cramer outlines how to play out the impending debt-ceiling crisis

The turmoil in bank stocks may look like a “train wreck” looming on Wall Street, Jim Cramer said Thursday, but as long as the debt ceiling crisis is resolved, it will not destroy the market.

“I think we’re going to have more of a mess like we saw the last time this happened in 2011, where the real problem is whether the rating agencies will downgrade the US debt rating, not what happens in Congress,” Cramer said.

While some experts say we shouldn’t worry about not getting a deal, Cramer said, he’s not optimistic — and believes a deal will arrive in the eleventh hour if it’s reached at all. He added that by this point, the market is likely to have already fallen.

“So why don’t we wait to do some buying? Well, if we get through the hurdle of the employment report tomorrow, the market will go higher,” Cramer said, adding that it would only be tradable due to the potential length of debt ceiling negotiations. “If we get a short-term recovery, I would recommend taking some profits and then bracing yourself for a debt ceiling failure, and then you can buy more.”

The debt ceiling crisis is just one of four major hurdles Cramer sees in the market right now.

But Kramer said that if concerns about the debt ceiling are removed, that should pave the way for a more optimistic market. It could potentially reopen the IPO window and enter good deals, such as Thursday’s market debut of Johnson & Johnson’s consumer health spin-off, Kenvue. Kenvue’s debut was the largest IPO in the US since 2021.