Market Update: Stocks Stage Roaring Comeback while Crypto Rally Fades

Wednesday was a dramatic day for Wall Street, as stocks overcame a massive intraday slump to finish firmly in the black. Meanwhile, cryptocurrency pivoted sharply lower after bitcoin fell back below $7,000.

Stocks Bounce Back from Volatile Session

U.S. stocks fell hard on Wednesday, with the Dow Jones Industrial Average shedding nearly 600 points on news of possible Chinese tariffs on U.S.-made goods.

The 30-stock index reversed course to gain 230.94 points, or 0.9%, to close at 24264.30.

The broader S&P 500 Index gained 1.2% to close at 2,644.49. Ten of 11 primary sectors contributed to the gains, led by IT and healthcare.

Nasdaq’s tech-heavy index added 1.5% to finish at 7,042.11.

A measure of implied volatility known as the CBOE VIX reached a high of 24.51. The stock market’s subsequent rally pushed the VIX lower by the end of the day, closing at 20.06.

Trade War Escalates

An escalating trade war between the United States and China shook the markets earlier in the day after Beijing announced it was considering reciprocal tariffs on the world’s largest economy. Beijing has produced a list of 106 U.S. goods that could be subject to a hefty import tariff of 25%. The products on the list are collectively valued at $50 billion, which is virtually identical in value to the hit list put together by the Trump administration targeting Chinese goods.

The Trump administration has adopted a hardline approach in an effort to reduce Washington’s massive trade deficit with China. In 2017, the deficit swelled to a record $372.5 billion.

U.S. Economy Hums Along

U.S. private-sector employment rose more than expected last month, adding further evidence that the economic recovery is still on track. Data from the ADP Research Institute showed the creation of 241,000 jobs in March, far outpacing the median estimate calling for 205,000.

Strong gains were reported across the services and goods-producing industries, with gains of 176,000 and 65,000, respectively.

“The job market is rip-roaring,” according to Mark Zandi, Moody’s Analytics’ chief economist.

The official jobs report will be released on Friday by the Department of Labor in Washington.

Crypto Market Sheds More than $20 Billion

Fears over a global trade war triggered heavy losses in the crypto market on Wednesday, as bitcoin and the major altcoins declined sharply. The cryptocurrency market cap plunged more than $23 billion to $255 billion, according to the latest figures provided by CoinMarketCap.

Bitcoin was the biggest drag on the market, as the digital currency fell as much as 8% to $6,872. BTC rose by a similar amount during the previous session.

Ethereum, Ripple XXRP and bitcoin cash each fell more than 8%. Litecoin also plunged more than 11%, reversing Tuesday’s double-digit advance.

Crypto assets have been trending much closer with stocks lately, a sign that mainstream investors were starting to get a hold of digital currencies. Crypto experts say one of bitcoin’s most powerful characteristics is price independence – something it appears to have lacked in recent weeks. The coin now accounts for more than 45% of the digital asset class, the highest since last December.

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.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi