Market Recap: Stability Returns to Wall Street Ahead of Fed Verdict; Bitcoin Eyes $9,000
Stability returned to the financial markets on Tuesday, with stocks, cryptocurrencies and commodities rising. The Federal Open Market Committee (FOMC) also kicked off its two-day policy meeting, which will almost assuredly lead to an interest-rate increase.
Stocks Up After Disastrous Start to the Week
U.S. stocks finished higher on Tuesday, with the major indexes recalibrating from a tech-induced selloff at the beginning of the week. The large-cap S&P 500 Index rose 0.2% to close at 2,716.94. Only five of 11 primary sectors contributed to the gains, with energy leading the rally.
Energy stocks were supported by large upswing in oil prices. U.S. and international crude benchmarks rose to their highest levels of the month.
The Dow Jones Industrial Average rose 116.36 points, or 0.5%, to 24,727.27. The blue-chip was up nearly 200 points after the open.
Meanwhile, the technology-laden Nasdaq Composite Index rose 0.3% to 7,364.30.
A measure of implied volatility known as the CBOE VIX fell more than 4% to close at 18.20, on a scale of 1-100 where 20 reflects the historically average range. The so-called “fear index” briefly spiked more than 30% on Monday during the height of the tech selloff.
Crypto Market Extends Recovery
Crypto assets added about $25 billion to their market cap, with all major coins registering gains. The market was trading at peak levels Tuesday afternoon, hovering around $348.3 billion. The market has rebounded more than $70 billion from Sunday’s swing low of around $275 billion.
Bitcoin extended its two-day recovery to 22% on Tuesday, with prices briefly returning above $9,000. At the time of writing, BTC was up more than 7% at $9,029.
Bitcoin cash was another big gainer, rising 10% to $1,067. Litecoin added more than 9% to $171. Stellar’s XLM also gained 19% to $0.28.
Despite the gains, the crypto market remains well off early-month peaks of $518 billion. A return to those levels will likely depend on a shift in investor attitude on a range of topics including regulation and cyber security.
Fed Meeting Underway
A quarter-point rate hike is considered a “virtual lock” at the conclusion of this week’s FOMC meeting, according to the latest Fed Fund futures prices. Policymakers will conclude their meetings on Wednesday, with the official rate verdict scheduled for 2:00 p.m. ET.
Some investors expect the Fed to adopt a more hawkish tone, which could be reflected in the accompanying dot plot projections. The March rate decision will be handed down with quarterly economic projections covering GDP, unemployment and inflation.
Although the U.S. economy has shown modest improvement in recent data releases, the Atlanta Fed recently downgraded its outlook on first quarter GDP growth to just 1.9%. The GDP tracker was as high as 5.4% earlier in the quarter.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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