Market Update: U.S. Stocks Fall After Fed; Crypto Rally Pauses Following Bitcoin Cash-Inspired Rally

U.S. stocks pivoted lower on Thursday, with all major indexes finishing in the red after the Federal Reserve left the path to a December rate hike wide open in its second-to-last meeting of the year. In cryptocurrencies, bitcoin cash and XRP gave back some of their gains following a streak of explosive growth.

Stocks Falter

All of Wall Street’s benchmark averages closed in negative territory. The large-cap S&P 500 Index fell 0.4% to 2,803.16, with nine of 11 primary sectors finishing in the red. Energy stocks were the biggest drag on growth as oil prices officially entered bear-market conditions.

The Nasdaq Composite Index closed down 0.5% at 7,530.89, reflecting weak performances in information technology and communication services companies.

Dow industrials pared losses to finish at 25,191.42, little changed from the previous close. The Dow 30 index surged 545 points on Wednesday following the U.S. midterm elections.

Fed Holds Line on Interest Rates

The Federal Reserve held the target for the benchmark interest rate between 2% and 2.25% on Thursday in a unanimous decision that followed two days of meetings. In reaching their decision, policymakers noted a marked slowdown in business investment but omitted any commentary on the recent bout of market volatility.

In terms of positives, the Fed acknowledged declines in unemployment since the September meeting. The national jobless rate has ticked down to 3.7%, the lowest in nearly five decades. At the same time, job creation remains firm, with employers adding 250,000 workers to payrolls last month.

Fed Chair Jerome Powell said in an interview with PBS that monetary policy is shifting from accommodative to neutral, a sign that rates will continue higher in December.

“Interest rates are still accommodative, but we’re gradually moving to a place where they will be neutral,” Powell said, as quoted by CNBC. “We may go past neutral, but we’re a long way from neutral at this point, probably.”

Cryptocurrencies Pare Gains

Cryptoassets slammed on the breaks Thursday, as bitcoin cash and XRP came off recent highs and bitcoin lost momentum after making notable progress earlier in the week. The combined value of all coins in circulation fell to $215.5 billion, down from a high near $221 billion on Wednesday, according to CoinMarketCap. The declines were accompanied by a sharp pullback in trade volumes, as total market turnover reached $13.7 billion from highs near $17 billion midweek.

Thee was no immediate catalyst for the pullback, though unsustainable rallies in bitcoin cash and XRP were largely to blame. Both coins entered overbought territory earlier in the week. This was much more the case for bitcoin cash, which had returned a staggering 50+% in less than seven days.

At the time of writing, BCH was down 4% at $591. XRP was trading at $0.5028, having lost 5.8%. The bitcoin price pulled back to around $6,450, losing 1.2% over 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