Market Update: U.S. Stocks Extend Relief Rally; Cryptocurrencies are a “New Institutional Investment Class,” According to Morgan Stanley

U.S. stocks rose again on Thursday, extending a relief rally to three days after President Trump signaled progress on trade following a conversation with Chinese counterpart Xi Jinping. Crypto markets were little changed after Morgan Stanley hailed bitcoin and altcoins as a “new institutional asset class.”

Stocks Continue Higher

All of Wall Street’s major indexes posted strong gains, with the large-cap S&P 500 Index climbing 1.1% to 2,740.36. Ten of 11 primary sectors contributed to the rally, with materials and consumer discretionary shares leading the market higher.

The Dow Jones Industrial Average climbed 264.51 points, or 1.1%, to close at 25,380.27. DowDuPont (DD) surged nearly 8% after the chemical manufacturer reported better than expected third-quarter earnings.

Meanwhile, the technology-driven Nasdaq Composite Index surged 1.8% to 7,434.06.

Trump-Xi Resume Trade Talks

President Trump on Thursday had a “long and very good” conversation on trade with Chinese counterpart Xi Jinping, stoking renewed optimism that the ongoing rift with China will be resolved amicably. The two leaders, which are scheduled to meet at the G-20 summit in Buenos Aires, Argentina later this month, spoke over the phone on matters ranging from North Korea to trade tariffs.

At 10:09 a.m. ET, Trump tweeted the following:

“Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!”

The U.S. president has placed considerable emphasis on upcoming trade talks with Xi, stating that a failure to reach an agreement would result in more tariffs being applied. The Trump administration has levied taxes on $250 billion worth of Chinese imports. That leaves roughly $267 billion on the table should talks fall apart later this month.

New Institutional Investment Class

Morgan Stanley is the latest Wall Street bank to turn bullish on bitcoin. In a newly released report, the financial services giant called cryptocurrencies a “new institutional investment class” ushering in a new era of decentralization.

The report, titled “Bitcoin Decrypted: A Brief Tech-In and Implications,” touts the blockchain arena’s surprise developments, including the formation of new funds that are making it easier for investors to gain exposure to cryptocurrencies. This comes despite a nearly year-long bear market that has reduced cryptocurrencies to a small fraction of their January peaks.

Institutional interest in crypto has been building for some time. The launch of bitcoin futures last December by CBOE and CME has helped bring newfound stability to the crypto market. Next month, Intercontinental Exchange’s Bakkt trading platform will begin offering physically settled bitcoin futures contracts.

Crypto prices rose slightly on Thursday, though upside was limited by persistently weak trading volumes. The cryptocurrency market capitalization increased slightly to $205.3 billion on daily trade volumes of $10.3 billion, according to latest available data. With the exception of Monero, all major coins in the top ten reported slight gains over the past 24 hours.

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