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Market Update: Stock-Rally Fizzles on Hawkish Fed; Cryptos Stabilize After Tumultuous Five Days

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U.S. stocks shed gains Wednesday after the Federal Reserve delivered its first interest-rate hike under Jerome Powell and signaled the continuation of policy tightening throughout the year. On the cryptocurrency front, markets stabilized after a volatile five-day stretch, with bitcoin holding near $8,900.

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Fed Stays the Course

The Federal Reserve raised its benchmark interest rate to 1.75% from 1.5% on Wednesday as part of a broader initiative to normalize monetary policy. The verdict gave a clear signal that rates will continue to rise throughout the year, with officials forecasting a steeper path in 2019 and 2020.

“The economic outlook has strengthened in recent months,” the Federal Open Market Committee (FOMC) said in a statement Wednesday. Officials also said they anticipate “further gradual adjustments in the stance of monetary policy.”

Officials gave a favorable view of the economy and labor market, commenting on the strong pace of hiring in recent months.

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However, not everyone is convinced the Fed will be able to maintain such an assertive course. The Atlanta Fed’s GDP tracker is forecasting economic growth of just 1.9% year-over-year in the first quarter, down from a prior estimate of 5.4%. Another big concern is how consumers will react to rising interest rates. Indebted households have restricted their spending in recent months, as evidenced by retail sales data. Higher interest rates will make it costlier to service those debts.

Stocks Whipsaw After Fed

U.S. stocks opened in positive territory and traded higher for most of the day, with markets giving a favorable first read of the FOMC statement because it made no mention of a fourth rate increase this year.

All the major indexes declined on Wednesday. The large-cap S&P 500 Index fell 0.2% to 2,711.93, with seven of 11 sectors finishing lower. The index had gained as much as 0.8% earlier.

The Dow Jones Industrial Average declined 44.96 points, or 0.2%, to close at 24,682.31. Meanwhile, the Nasdaq Composite Index shed 0.3% to close at 7,345.29.

The CBOE VIX fear index fell slightly on Wednesday, closing down nearly 2%% at 17.86. Vol touched a session low of 16.26 on a range between 1 and 100.

Cryptocurrencies Flat

When viewed collectively, the crypto market was little changed on Wednesday, with total values hovering near $345 billion. Movement within the top-five was narrow by the afternoon, with bitcoin, Ethereum and Litecoin holding steady, according to data provider CoinMarketCap.

However, there was sharp divergence beyond the top-five, with Cardano and EOS rising more than 7% apiece. ICON was the biggest percentage gainer after South Korea’s Bithumb exchange announced it has added the cryptocurrency to its listing.

On the opposite side of the spectrum, Stellar, NEM and Ripple XRP struggled in mid-week trading.

Bitcoin’s dominance index weakened slightly on Wednesday but continued to hold near 44% of the market. The world’s biggest cryptocurrency hit a high above $9,000 on Tuesday but has since consolidated below that level.

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.

Featured image courtesy of Shutterstock.

 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 335 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Market Overview

Market Update: Consumer Staples Sink S&P 500 Index; Cryptocurrency Prices Rise $16 Billion

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U.S. stocks declined on Thursday, as consumer staples posted heavy losses amid corporate earnings season. Meanwhile, a broad recovery in altcoins led the digital currency market sharply higher.

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Stocks Decline

All of Wall Street’s major indexes headed for losses, with the S&P 500 Index falling 0.6% to 2,693.13. Nine of 11 sectors contributed to the decline, with the consumer staples component plunging 3.1%.

Within the sector, tobacco plunged 11.5% after Philip Morris International Inc. (PM) posted first-quarter revenue that trailed forecasts.

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Information technology shares also fell 1.1%, with Apple among the worst-performing companies in the sector.

The technology-driven Nasdaq Composite Index closed down 0.8% at 7,238.06. The Dow Jones Industrial Average also fell 83.18 points, or 0.3%, to finish at 24,664.89.

A measure of 30-day volatility known as the CBOE VIX reached a high of 16.92, which was still well below the historic average. The so-called “fear index” settled at 15.96 for a gain of only 2.3%.

If after-hours trading is any indication, volatility could be on the rise on Friday. Several shares plunged after the bell following disappointing corporate earnings.

Sketchers (SKX) fell 23%, Atlassian (TEAM) declined 11.3% and E*Trade (ETFC) was down more than 1%.

Cryptocurrency Rally Intensifies

Crypto assets extended their recovery on Thursday, with the most popular altcoins leading the rally.

Ethereum rose 7.8% to $563, Ripple XRP gained 9.4% to $0.77 and bitcoin cash climbed 9.4% to $963.49 (all figures according to CoinMarketCap). Bitcoin also recorded gains, rising 1.4% to $8,287.88.As a result, the total value of the cryptocurrency market reached $358.4 billion, the highest since Mar. 14.

The rally coincided with the end of U.S. tax season after the IRS extended the reporting deadline by 24 hours. U.S. cryptocurrency traders may have been on the hook for as much as $25 billion in capital gains taxes, based on recent estimates. However, that number has not been confirmed.

The market’s impressive recovery comes even as nations such as India introduce new restrictions of digital currency trading. Earlier this month, the Reserve Bank of India banned regulated banks from facilitating cryptocurrency purchases.

While India is among the world’s fastest-growing nations, it is a small player in the cryptocurrency market. News of the crackdown sent bitcoin prices to a low of $5,400 on domestic exchanges. Bitcoin is still trading at a discount on Indian exchanges, although the spread is less than $200, based on Unocoin exchange data.

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.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 335 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Rally Fades in Stocks as Apple Weighs on Nasdaq

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We warned yesterday that stock markets got vulnerable as the major US indices reached short-term overbought readings, and after a choppy Wednesday session, equities turned lower today in early trading. Apple fell by more than 2% in early trading on a supplier report regarding declining orders from the smartphone giant, and the sliding stock dragged the tech segment lower.

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S&P 500 Futures, 4-Hour Chart Analysis

While the short-term technical picture deteriorated, the losses are muted so far, and the rising short-term trendlines are holding up. Volatility ticked higher, with the VIX bouncing off its two-month lows, but the index is well below the levels seen in the beginning of the month, as Syria-related fears continued to ease and the Chinese-US trade spat also took the back seat in the mainstream media.

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DAX, 4-Hour Chart Analysis

Stocks finished broadly lower in Europe, while Asian equities reversed their early gains, with trading volumes still being low across the board. The economic calendar was almost empty today, with only the much worse than expected British retail sales figure adding to the string of negative surprises coming out form the UK this week. In the US, the Philly Fed index came in higher than expected, while weekly jobless claims were in line with expectations.

Dollar Stable as Short Yields Hit New Highs

2-Year Treasury Yields, 4-Hour Chart Analysis

Treasury yields resumed their rise in the quiet environment, and as the short end of the curve continues to outperform the flattening of the yield curve continues in earnest. While forex markets are still mostly flat, the Dollar is drifting higher against most of its peers in US trading.

AUD/USD, 4-Hour Chart Analysis

Commodity-related currencies are little changed, although both the Aussie and the Canadian Dollar are off their recent highs, and should they roll over, the bullish case would receive another hit.  Despite the weakening of the risk rally, crude oil continues to hit multi-year highs, with the WTI contract getting close to the $70 per dollar level today. Gold fell back below $1350, as the choppy consolidation pattern is still intact, and the slight risk-off shift wasn’t enough to trigger meaningful safe-haven flows.

Featured image from Shutterstock            

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 225 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

Market Update: S&P 500 Notches Third Straight Rally on Earnings; Cryptocurrencies Hit $340 Billion

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U.S. stocks finished mostly higher on Wednesday, as earnings optimism lifted the S&P 500 Index and Nasdaq to their third consecutive daily advance. Meanwhile, cryptocurrencies resumed their uptrend after a two-day pause as bitcoin returned above $8,000 and bitcoin cash surged double-digits.

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Stocks Finish Mostly Higher

Two out of the three major U.S. indexes notched gains, with the S&P 500 Index edging up 0.1% to 2,708.64.

Four of 11 sectors contributed to the rally, with energy shares jumping 1.6%. Other commodity-sensitive sectors such as materials and industrials also reported firm gains.

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The biggest laggards on Monday included consumer staples and financials, which fell 0.9% and 0.4%, respectively.

The technology-laden Nasdaq Composite Index rose 0.2% to finish at 7,295.24.

Meanwhile, the Dow Jones Industrial Average fell 38.56 points, or 0.2%, to close at 24,748.07. The blue-chip index is coming off two straight sessions of 200-point gains.

A measure of implied volatility known as the CBOE VIX rose 2.3% to 15.60, which was still well below the historic average near 20. Volatility has been creeping lower in anticipation of strong quarterly earnings from U.S. firms.

The first round of Q1 reports have not disappointed, with major banks and technology companies reporting above-trend growth. Analysts at FactSet are forecasting the strongest quarter of year-over-year growth since 2011.

Cryptos Extend Rally

After initial hesitation, the cryptocurrency market rose on Wednesday as the end of tax season offered temporary reprieve to volatility.

The total market cap for all cryptos in circulation reached a high of $342 billion, according to CoinMarketCap. That was a gain of $19 billion on the day and the highest in almost a month.

Bitcoin cash (BCH) was the biggest gainer percentage-wise, climbing nearly 16% to $880 per coin on the major exchanges. Original bitcoin (BTC) advanced 3.4% to $8,190. However, its total share of the market fell below 41%.

Other major cryptocurrencies also contributed to the rally, with Ethereum adding 3.3% to $521 and Ripple XRP gaining 7.6% to settle at $0.71.

There was no immediate catalyst for the recovery, although tax relief may have played a role. The IRS extended its deadline for U.S. tax filing by one day after servers overloaded on deadline day.

Americans cryptocurrency holders may have owed as much as $25 billion in capital gains taxes, according to Tom Lee of Fundstrat Global Advisors. However, data from Credit Karma showed that less than 100 of its 250,000 filers have reported cryptocurrency-related capital gains.

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.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 335 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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