Market Update: U.S. Stocks Fall on Trade, Emerging Market Tensions; Cryptocurrencies Recovers $20 Billion

Stocks and commodities faced brisk selloffs Wednesday, as lingering risks on the trade and emerging-market fronts dampened investors’ appetite for riskier assets. Meanwhile, cryptocurrencies staged a large relief rally led by bitcoin and Ethereum.

Stocks Decline

Wall Street’s major indexes finished well off session lows on Wednesday. The Dow Jones Industrial Average closed down 137.51 points, or 0.5%, at 25,162.41. The broader S&P 500 Index declined 0.8% to 2,818.37. Both averages were down more than 1% earlier in the day. Meanwhile, the technology-driven Nasdaq Composite Index fell 1.2% to 7,774.12.

Losses were spread out across seven major sectors, with energy shares falling 3.4% as a whole. Materials, tech companies and discretionary shares also fell more than 1%.

The CBOE VIX, also known as the fear index, rose by as much as 27% to reach 16.86. VIX settled at 15.05, gaining 13.1%.

Oil Prices Sink to Two-Month Lows

Crude plunged to more than two-month lows Wednesday after U.S. government data showed a large, unexpected jump in weekly inventories.

The U.S. Energy Information Administration (EIA) reported a stockpile rise of 6.8 million barrels for the week ended Aug. 10, confounding estimates for a 2.5 million-barrel drop. The jump was associated with a sharp rise in crude imports and a fall in exports. The world’s largest economy imported 1 million barrels per day, data showed.

U.S. West Texas Intermediate (WTI) futures reached a session low of $64.51 a barrel, which would have marked the lowest settlement on the New York Mercantile Exchange since April. At last check, WTI was down $2.08, or 3.1%, to trade at $64.96 a barrel. ICE’s Brent contract declined $1.70, or 2.4%, to $70.76 a barrel.

Cryptocurrencies Rebound

Digital assets recovered tens of billions in lost market cap Wednesday, with bitcoin and Ethereum emerging as the biggest gainers. Bargain hunters scooped up ether at 14-month lows after following a 35% rout over seven days. At press time, the ether price had gained nearly 13% to $294.

After a successful defense of $6,000, bitcoin rose 6.5% to $6,495. The largest cryptocurrency by market cap controls just over 53% of the total market. That figure approached 55% on Tuesday.

The total cryptocurrency market was worth $209.5 billion Wednesday, up more than $20 billion from Tuesday’s low. Total trade volumes averaged around $14 billion.

Despite the gain, analysts have warned that the price outlook for cryptos remains negative amid the recent cash-out of ICOs.

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

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