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.
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.
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.