Market Update: U.S. Stocks Fall Again on Geopolitics, Global Growth Woes; Bakkt Announcement Fails to Inspire Crypto Rally
U.S. stocks followed their European and Asian counterparts lower on Tuesday, as geopolitical tensions and concerns over global growth dampened investors’ sentiment. Crypto markets were little changed after Intercontinental Exchange (ICE) set a date for the launch of its new digital currency platform.
Stock Selloff Deepens
Wall Street opened with heavy losses following a tumultuous pre-market that saw Dow Jones futures plunge by more than 400 points. By the end of the day, all major U.S. indexes were well off session lows.
The large-cap S&P 500 Index closed down 0.6% at 2,740.69. Eight of 11 primary sectors finished lower, with energy shares plunging 2.5% as a whole. Industrials, materials and financials also experienced heavy losses.
Dow industrials fell 125.98 points, or 0.5%, to finish at 25,191.43. Caterpillar Inc. (CAT) and 3M Co (MMM) were the biggest decliners after announcing negative earnings guidance this year and next.
Meanwhile, the technology-focused Nasdaq Composite Index fell 0.4% to 7,437.54.
The CBOE Volatility Index, also known as the VIX, reached a session high of 24.66 on Tuesday. It would later settle at 20.71 for a gain of 5.5%.
Earnings Optimism Fades
Despite starting off on a solid note, third-quarter earnings season has produced mixed results for Wall Street’s big firms. Companies that missed the mark on their top and bottom lines have faced heavy selling pressure despite strong performances in other sectors.
On Tuesday, Dow blue-chip 3M lowered its earnings outlook for 2018 while Caterpillar acknowledged it will have to raise prices for most of its machines next year. Both companies are facing the burden of President Trump’s tariff war and what appears to be a protracted slowdown in China.
The Chinese economy expanded 6.5% annually in the third quarter, the weakest since 2009. The U.S. economy is projected to grow 3.9% annually between July and September, according to the Atlanta Fed’s GDP tracker. Economists at the Commerce Department will produce their first batch of Q3 GDP numbers on Friday.
Cryptos Extend Dismal Performance
Digital currencies failed to rally on Tuesday after Intercontinental Exchange announced a date for its new cryptocurrency platform. The global exchange operator announced Monday it will begin settling physical bitcoin futures contracts on Dec. 13. Bakkt, the platform that will facilitate the transactions, has been touted as a potential game changer for luring large sums of institutional capital to the crypto arena.
The cryptocurrency market cap reached a low of $207.6 billion on Tuesday, and was last seen hovering around $209.4 billion. Majors like bitcoin, Ethereum and Litecoin saw little movement compared with 24 hours ago. Meanwhile, XRP fell 1.3%. Bitcoin cash and Cardano and Tron were also down slightly.
Low-volume trading continues to impede on the market’s recovery. On Tuesday, volume across all virtual currency exchanges reached $10.4 billion, according to CoinMarketCap.
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.
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