As Wall Street braces itself for the results of Friday's labor report, CNBC's Jim Cramer told investors not to make any major moves and listed off certain mistakes that he thinks many are making.

“We're just playing the waiting game, with all extremes off the table,” he said. “Sometimes it's okay just to sit on your hands, watch some football, hey, even read a book—anything other than trading, at least until we get more clarity from the data and the Fed.”

The S&P 500 closed down for the third day in a row, dipping 0.3%, while the Dow Jones Industrial Average shed 0.54%. And after rising as much as 1.2% earlier in Thursday's session, the tech-heavy Nasdaq Composite gained 0.25%. The Labor Department's nonfarm payroll report on Friday is expected to heavily inform the Federal Reserve's interest rate policy decision, with investors eagerly waiting for the central bank to issue cuts.

Some on Wall Street are worried the Federal Reserve will not facilitate a smooth transition out of the tightening cycle, Cramer said. But according to him, these fears are not warranted because the central bank is competent, and Fed Chair Jerome Powell has “a game plan” and should get the benefit of the doubt.

Cramer also said it's too early for Wall Street to decide that artificial intelligence-oriented companies are on the outs, as “we're only a couple of years into finding use cases” for the technology. He suggested that the peak of AI innovation isn't necessarily chat bots and noted that generative AI shows promise in fields like healthcare. Investors are also too aggressive right now, he added, noting the way megacap tech stocks opened Thursday's session up significantly but did not sustain those gains.

“People keep making a ton of mistakes here when they really should just be sitting on their hands. Sometimes the best you can do is absolutely nothing,” Cramer said. “Instead, they're acting out every possible fantasy and nightmare when it comes to the market, and not only is it tedious and foolhardy, it's very expensive for anyone who's running with this non-strategy.”

Investors Need to Be Patient

Cramer advised investors to be patient and wait for more clarity from the data and the Fed before making any major investment decisions. He also said that the market is still in a period of uncertainty and that investors should not expect a smooth transition out of the tightening cycle.

It's Too Early to Give Up on AI Stocks

Cramer also argued that it's too early to give up on AI stocks, saying that the peak of AI innovation isn't necessarily chatbots. He noted that generative AI shows promise in fields like healthcare. He also pointed out that the market is still in the early stages of finding use cases for AI technology and that investors should not expect a quick turnaround in the sector.

Avoid Overreacting to Market Movements

In conclusion, Cramer's advice to investors is to avoid overreacting to market movements and to be patient in their investment decisions. He says that the market is still in a period of uncertainty and that investors should not expect a smooth transition out of the tightening cycle. He also argues that it's too early to give up on AI stocks and that the peak of AI innovation isn't necessarily chatbots.

Investors should be cautious and avoid making rash decisions based on short-term market fluctuations, Cramer advised. He suggested that the best course of action for most investors may be to simply wait and see what happens in the near future.