Market Update: Trade-War Risk Weighs on Stocks as Cryptos Plunge

U.S. stocks traded mixed on Thursday, as the indexes failed to hold a strong early-morning rally amid ever-present economic risks. Cryptocurrencies were hit with a fresh selloff bringing the total market cap to new five-week lows.

Stocks Remain Under Pressure

After a strong open, the S&P 500 Index was down 0.1% by the close to finish at 2,747.33, with most major sectors languishing. Consumer staples and materials were the biggest losers, falling at least 0.6%. Shares of energy companies also finished in the red.

Tumbling tech shares weighed on the Nasdaq Composite Index, which fell 0.2% to 7,481.74.

The Dow Jones Industrial Average held on to gains but finished well off session highs. The blue-chip average closed up 115.54 points, or 0.5%, at 24,873.66. It was up by nearly 300 points earlier in the day.

The CBOE VIX, also known as the VIX, pointed to fairly calm conditions on Wall Street. The so-called “fear index” edged down to close at 16.49 on a scale of 1-100. A VIX reading below 20 usually corresponds to favorable conditions for the S&P 500.

Equities have been pressured all week by the prospect of a trade war instigated by the Trump administration. Last week, President Trump signed an order to tax steel and aluminum imports at a rate of 25% and 10%, respectively. Canada and Mexico were formally excluded from the tariff policy as part of the ongoing negotiations to revamp NAFTA.

Also troubling investors on Thursday was a report by The New York Times special counsel Robert Mueller had subpoenaed President Trump’s businesses “in recent weeks.”

On the data front, U.S. initial jobless claims fell by 4,000 last week to a seasonally adjusted 226,000, the Labor Department reported Thursday.

The New York Fed’s Empire State Manufacturing Index also jumped more than expected, boosting optimism about the domestic economy.

Crypto Selloff Intensifies

Cryptocurrencies extended their slide on Thursday, with the total market capitalization falling to a low of $309 billion. That was the lowest since early February when prices were recovering from a nearly 70% correction.

The market later stabilized around $327 billion, down $10 billion over the previous 24 hours.

The recent slide was instigated last week by reports of a sophisticated phishing attack on Binance, one of the world’s largest cryptocurrency exchanges. Although no funds were compromised, the exchange has announced a bounty program to help stave off future attacks.

A foiled hack attempt wasn’t enough to stabilize the market after the U.S. Securities and Exchange Commission (SEC) warned exchanges they need to register with the agency if they intend to provide access to security tokens.

The third leg of the recent correction came Wednesday after Google said it was banning all cryptocurrency-related advertising.

Amid all the bad news, Lightning Labs announced Thursday it had launched the beta version of Lightning Network Daemon, an important milestone in bringing scalability and cost efficiency to bitcoin payments.

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