• CNBC's Jim Cramer on Wednesday honed in on the Dow Jones Utility Average, whose rally over the last several weeks he said suggests the economy is slowing down and that interest rates may be headed lower.
• "The utilities perform best when the economy's throttling back," he said. "If this index were just up for a week or even two weeks, I might ignore it. But for the [utilities] to rally this long, sorry, it is flashing red for the economy, telling us we're headed into the shoals of a slowdown."

CNBC's Jim Cramer on Wednesday honed in on the Dow Jones Utility Average, whose rally over the last several weeks he said suggests the economy is slowing down and interest rates may be headed lower.

"The utilities perform best when the economy's throttling back," he said. "If this index were just up for a week or even two weeks, I might ignore it. But for the [utilities] to rally this long, sorry, it is flashing red for the economy, telling us we're headed into the shoals of a slowdown."

The average is made up of 15 major utilities stocks and has been climbing since April 16, ticking up 0.54% Wednesday.

But Cramer said this sector is not necessarily an ideal market leader. These stocks do well in a slowdown because they are not discretionary — because consumers must pay their utilities bills, he said. Cramer added that utilities have to issue a lot of debt to maintain and expand their operations, saying they are now spending more to support the burgeoning growth of data centers. If rates were going higher, these stocks' need to borrow might send their stocks down, but that's not what's happening, he said.

Cramer reaffirmed his stance that signs of a slowing economy have been cropping up over the last several weeks, and that the recent rise in utilities only backs up that theory. He also suggested Federal Reserve Chair Jerome Powell's April commentary — which indicated there will be fewer interest rate cuts than investors had hoped for — could have helped bring on the slowdown.

"At the end of the day, the [utilities], they never lie," Cramer said. "When they're rallying this steadily, these stocks are screaming that Jay Powell may have gotten the ball rolling for that slowdown simply by warning us that he's not going to prevent one as long as inflation stays high."

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