Market Update: U.S. Stocks Rattled by Tariff Threat; Crypto Bloodbath Wipes $35 Billion Off Market Cap
U.S. stocks finished mixed on Wednesday as the threat of an all-out trade war between the United States and China rattled investors’ confidence. In cryptocurrencies, a decision by the U.S. Securities and Exchange Commission (SEC) to delay a ruling on a keenly awaited bitcoin ETF sent the market to 12-month lows.
The large-cap S&P 500 Index pared gains in the final moments of trade to settle flat at 2,857.70.
A relatively upbeat performance in tech pushed the Nasdaq Composite Index higher. The technology-driven gauge advanced 0.1% to finish at 7,888.32.
Dow industrials edged down 45.16 points, or 0.2%, to end at 25,583.75
A measure of implied volatility known as the CBOE VIX fell to more than six-months on Wednesday, a sign of calm trading conditions on Wall Street. The so-called “fear index” dipped 0.7% to 10.85.
Stocks were pressured at the open after China’s Ministry of Commerce announced 25% tariffs on $16 billion worth of U.S. goods. With the latest tariffs, China is targeting vehicles, fuel and fiber optic cables.
U.S. Oil Prices at Seven-Week Lows
Oil prices swung sharply lower on Wednesday after U.S. government data showed a smaller than expected draw-down in weekly crude inventories.
Commercial crude inventories fell by 1.351 million barrels for the week ended Aug. 3, according to the U.S. Energy Information Administration (EIA). Analysts polled by The Wall Street Journal estimated a deeper decline of 2.3 million barrels.
U.S. West Texas Intermediate (WTI) futures declined $2.44, or 3.5%, to $66.73 a barrel – the lowest in seven weeks. Brent crude, the international futures contract, fell $2.63, or 3.5%, to $72.02 a barrel on London’s ICE futures exchange.
Oil prices received a boost earlier in the week in anticipation of fresh Iran sanctions. However, Iranian Foreign Minister Mohammad Javad Zarif told local media that Tehran has no plans to cut crude exports.
More than $35 billion was wiped from cryptocurrency values on Wednesday after the SEC announced it was delaying a verdict on a long-awaited bitcoin ETF. Coin values plummeted to $219 billion, the lowest in 12 months, as bitcoin gave back more than two-thirds of its recent rally and the major altcoins fell between 12% and 22%.
On Tuesday, the SEC published a memo indicating that had not reached a decision on whether to approve the VanEck SolidX Bitcoin ETF. Although the agency said it will decide on the matter by Sept. 30, a further delay is likely as regulators go through more than 1,300 comments on the matter.
Although the market treated the SEC’s announcement as a surprise, many in the investment community were anticipating a delay.
“If you’re selling today after this decision, it’s the wrong way to do crypto investing,” Brian Kelly, CEO of cryptocurrency investment firm BKCM told CNBC. “A little spoiler alert: On September 30th, they will likely postpone it again because the market’s not ready for it and the SEC hasn’t had all the answers to their questions yet.”
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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