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Market Update: U.S. Stocks Sputter as Fed Minutes Signal Assertive Rate-Hike Path

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U.S. stocks traded lower on Wednesday, with financials diverging from the broader market in anticipation of an assertive rate-hike path by the Federal Reserve. Crypto markets were largely unfazed midweek, though Stellar XLM emerged as the most prominent winner with gains of more than 7%.

Stocks Settle Down

Equity markets drifted between gains and losses before settling mostly lower. The Dow Jones Industrial Average closed down 91.74 points, or 0.4%, at 25,706.68. The technology-heavy Nasdaq Composite Index closed at 7,642.70, where it was virtually unchanged. Meanwhile, the large-cap S&P 500 Index pared gains by the close to settle flat at 2,809.21.

Most major sectors finished in the red, with energy, materials and discretionary shares leading the market lower. Technology stocks also declined sharply. On the opposite side of the spectrum, financials stocks rose more than 0.9% on average.

FOMC Minutes Confirm Need for Higher Interest Rates

Several members of the Federal Reserve’s policy-setting board believe interest rates need to rise higher than the long-term average, according to the official transcript of last month’s meeting, which was released on Wednesday. All members agreed to remove reference to accommodative monetary policy from the official statement.

Central bankers last month voted unanimously to raise the federal funds rate to 2.25%, with the official policy statement making a strong case for an additional hike in December. Rate-hike expectations have been baked into the market, with long-term bond yields soaring to seven-and-a-half year highs.

“Participants generally anticipated that further gradual increases in the target range for the federal funds rate would most likely be consistent with a sustained economic expansion, strong labor market conditions, and inflation near 2%over the medium term,” the official transcript read.

The U.S. dollar continued higher after the release of the FOMC minutes at 2:00 p.m. ET. The dollar index (DXY), which tracks the performance of the greenback against a basket of six currencies, jumped 0.5% to 95.48.

Crypto Markets Stabilize

With the exception of Stellar XLM, major cryptocurrencies were largely unchanged Wednesday as a lack of trading catalysts kept speculators on the sidelines. The combined valued of digital assets reached a high of $212.7 billion, according to CoinMarketCap. The total market has since fallen back to around $211 billion.

XLM rose to fresh weekly highs on reports that PrimeTrust, a qualified custodian, was rolling out support for Stellar-backed tokens. The XLM token is currently valued at $0.2412.

Bitcoin, the largest digital currency by market cap, consolidated in the mid-$6,500 range following a sharp run-up in prices at the start of the week. BTC continues to trade at a premium on Bitfinex and other exchanges known for facilitating large USDT orders. USDT, the controversial stablecoin issued by Tether, sold off on Monday, underscoring a broad shift in investor sentiment.

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.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 664 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Market Overview

Market Update: U.S. Stocks Plunge; Carnage in Crypto Land

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U.S. stocks declined sharply on Wednesday, as global growth concerns and a rollover in technology shares triggered a fresh selloff on Wall Street. Meanwhile, cryptoassets lost their yearly price floor as bitcoin and the major altcoins plunged double digits on the eve of the BCH hard fork.

Stock Selloff Resumes, Then pauses

All three major U.S. indexes booked heavy losses midweek. The large-cap S&P 500 Index declined 0.8% to 2,701.61. Losses spread across nine of 11 primary sectors, with financials and information technology leading the downtrend.

Slumping tech shares undercut the Nasdaq Composite Index, which fell 0.9% to close at 7,136.40.

The Dow Jones Industrial Average lost 205.45 points, or 0.8%, to end the day at 25,081.04. Tech bellwether and Dow blue-chip Apple Inc. (AAPL) flirted with bear-market territory as concerns over iPhone shipments continued to weigh. Since peaking above the trillion-dollar mark, Apple’s market capitalization has fallen by over $200 billion.

Concerns about peak revenue and disappointing sales targets have contributed to a mass exodus out of technology shares in recent months. The S&P 500’s information technology index has pared its year-to-date return to less than 7% amid the latest drop. The index was up more than 20% for the year through Oct. 2.

Global Growth Woes in Focus

Signs of a slowing global economy have lowered risk appetite across major asset classes, with recent data showing downturns in both emerging and industrialized markets. On Wednesday, the German government said its economy shrank in the third quarter for the first time in over three years.

German gross domestic product (GDP) contracted 0.8% annually in Q3, casting a large shadow over the Eurozone economy. Germany accounts for roughly one-fifth of euro area output and is the backbone of its manufacturing sector.

Separately, Japan reported that its economic output declined 1.2% annually during the same period, as global trade tensions undermined business confidence.

The latest data show a dramatic divergence in economic fortunes between the United States and its global allies. Under President Trump, the U.S. economy expanded 3.5% annually in the third quarter. In Q2, GDP growth reached multi-year highs at 4.2%.

Cryptocurrency Market Notches New Yearly Low

The crypto market took a decisive shift lower on Wednesday, as coin values lost a combined $30 billion in value in just over 24 hours. Among the top 20 coins, losses ranged between 9% and 17%, with bitcoin, Ethereum and the leading tokens losing billions in market cap.

Bitcoin’s selloff touched 13-month lows, with prices briefly falling below $5,400. Despite the loss, bitcoin’s share of the overall market cap increased.

While there was no single catalyst for the selloff, anxiety over bitcoin cash and its pending hard fork seems to have influenced investor sentiment. At the time of writing, BTC was down 17%, having completely erased the 50+% gains it registered in the weeks leading up to the Nov. 15 hard fork.

The combined crypto market cap reached a new yearly low of $182 billion on Wednesday. Trade volumes spiked nearly 40% to $19.7 billion.

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.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 664 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

Pre-Market Analysis And Chartbook: Markets Flat Ahead of Key Economic Data

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Wednesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,729 0.02%
DAX 30 11,467 -0.05%
WTI Crude Oil 56.16 1.59%
GOLD 1,202 -0.03%
Bitcoin 6,211 -0.80%
EUR/USD 1.1287 -0.01%

As traders awaited the key US economic releases of the week, the Consumer Price Index (CPI) and the Retail Sales report, financial markets were relatively quiet and flat before the Wall Street open, but things got volatile since then, despite the muted CPI reading. The progress in the Brexit negotiations and the liquidation event in crude oil were making headlines today, although the advance in the Pound stalled, as equity markets and in general risk assets are still under clear selling pressure following the turmoil in October. The second half of the week will likely see strong moves across asset classes, and given the negative technicals, odds favor a risk-off shift globally.

EUR/USD, 4-Hour Chart Analysis

The Dollar is consolidation after its move to new 16-months highs on Monday, and for now, the currency failed to confirm the break-out, at least as measured by the Dollar index. The EUR/USD is showing a slightly different picture compared to the broader measure, and the common currency is still in a steep downtrend, even as it is back near the key 1.13 level, retracing a large chunk of Monday’s move.

A durable recovery above 1.13 could signal a failed break-down and another consolidation phase in the pair, with the long-term momentum indicators still being oversold, but the broad downtrend is clearly intact, and long positions should only be considered as short-term trades.

Nasdaq 100 Futures, 4-Hour Chart Analysis

In equities, we continue to see bearish technicals from a broader perspective, and although the post-Fed selloff halted, for now, the re-test of the October lows still seems likely in the coming weeks. The Nasdaq is still relatively weak compared to the other major US benchmarks, and the tech benchmark is the closest to its lows, even after yesterday’s bounce.

The overnight session saw a slight bullish bias in stocks, with the indices holding on to above their weekly lows, but we still view the short-term rally attempts as selling opportunities given the hostile technicals across the globe.

Crude Oil in Turmoil as Copper Holds Support, For Now

WTI Crude Oil, 4-Hour Chart Analysis

The bounce that we have been expecting in crude oil didn’t materialize despite the deeply oversold momentum readings, as the dip below the $58-$60 zone triggered a liquidation event in the commodity. The worst day for oil in 3 years saw the WTI contract falling below $55 per barrel, its lowest level in a year. Today, oil is attempting a recovery, and we continue to expect a rally up to the $63-$65 zone in the coming weeks.

Copper Futures, 4-Hour Chart Analysis

Elsewhere in the commodity segment, we are seeing further signs of weakness, despite the pullback in the Dollar. Gold is having a flat quiet day, so far, hovering near the $1200 price level, while despite the renewed trade-deal optimism, copper failed to bounce higher substantially amid the slight risk-on shift. The industrial metal is trading just above its recent swing low, and a move below that would be a sign that the lengthy consolidation phase is ending and the broader downtrend is about to resume.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

Gold Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 394 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

Slick Move

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Hi Everyone,

The company known as Ripple Labs seems to have a decent shot at replacing Swift as the way that banks move money around globally. The way banks currently send money from one place to another is archaic and certainly needs to be changed.

One of the biggest hurdles for mass adoption of Ripple’s XRP system however, are the current battles playing out in the US court system.

Ripple currently has several lawsuits against it with the plaintiffs claiming that the XRP token is actually a security. If so, the company will likely need to pay dearly for not registering with the SEC before raising money from the public.

In a “slick move” the company has now consolidated all of these cases into one hoping for a positive decision from the federal court.

We continue to keep an eye on this case with great interest and in the meantime, traders are working hard to defend the 50 cent per coin price. Though many of the popular cryptos have given back their gains from the early November rally, XRP is standing its ground quite well so far.

In a surreal coincidence, if we apply the famous Fibonacci Retracement Tool to XRP’s price rise, we see that the 50% mark comes out to exactly $0.50 per coin. Let’s hope it holds.

It’s important to note that even if we’re very generous and say that Ripple does have a 50/50 chance to replace the banking system (a recent report written by Ripple execs only gave it a 25% chance), it’s still a huge risk to take in the event that it doesn’t work out. That’s why it always pays to diversify your portfolio.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Apple Falls
  • Oil Slick
  • Crypto Volumes Spike in South America

Please note: All data, figures & graphs are valid as of November 14th. All trading carries risk. Only risk capital you’re willing to lose.

Traditional Markets

Stock indices are down today as it seems investors prefer to take risk off the table. There was an attempt at a rally on Wall Street yesterday after positive comments from Larry Kudlow on China trade, but it did fade by the end of the day.

The tech sector is being watched particularly closely and Apple stock is a concern for investors wondering if iPhone sales may have peaked. Apple has now fallen 17.5% from it’s all-time high and is now trading below its 200 DMA (blue line).

As much as it pains me, what goes up must come down. Wonder what Sir Isaac Newton would say about this.

If people are scared of tech, they’re terrified of oil. Crude extended its losses yesterday but we are seeing a bit of a bounce this morning. As we discussed in Monday’s market update (titled: Line in the Sand), a move below $60 (yellow dotted line) could be devastating and indeed it was.

This morning we’ve seen a bounce off $55 (thin red line).

A move below $55 is certainly possible but the tendency of a market that’s moved this much so quickly is usually to take a break.

Nobody is taking the oil slide more seriously than Nicolas Maduro, the President of Venezuela. In fact, Venezuela is now making a push to end the era of the petrodollar entirely.

This comes at an interesting time when Iran’s Crypto-Rial is set to go live within the next few days and even the IMF seems to be advocating for state-backed digital currencies around the globe.

BCH Hard Fork Tomorrow

Near as I can tell, the drama happening in BCH isn’t a great concern. Let’s face it, if prices weren’t as flat as they’ve been in recent months, we probably wouldn’t even be talking about this.

Preliminary results of a poll that I put out on Twitter this morning is showing people’s sentiment about this pretty clearly.

So, nobody really seems to care. For those of you who are watching though, I’d recommend keeping your eyes on the following two websites.

Number one is Coindash’s cash.coin.dance. They’ve got a nice cointdown timer and show the hashwar pretty well.

The other is called forkmonitor.info that was set up by BitMex for this purpose. Though I don’t really understand what they’re trying to show in the Bitcoin Cash tab, I’m hoping they’ll have more info as the situation progresses.

Volume Spikes in South America

Prices seem to be declining slightly this morning but overall things are pretty stable. With the exception of Tether, which traded as low as $0.96 on some exchanges last night.

All eyes are on BTC to see if it holds onto its current support level of $6,000 but more important than these short-term price movements is a growing trend that we’ve been tracking of rising volumes, especially in several key areas.

One of those areas that I’ve noticed in South America. This site showing volumes by country isn’t a pure indicator since it only tracks trades made on the peer-to-peer site localbitcoins.com. However, if we look at the various countries on the list you’ll notice that all the Latin American countries listed are showing increasing volumes lately.

Now, I’d rather not repost all the charts here but I do urge you to visit coin.dance/volume/localbitcoins to see for yourself.

Volumes are on the rise in Mexico, Dominican Republic and Argentina and are near their all-time highest levels in Colombia, Chile, Peru, and Venezuela.

As the economic cycle continues and the United States continues to raise their interest rates, they put pressure on the emerging market economies, but as we can see, people are getting smarter, the global economy is getting freer, and we now have the tools to protect ourselves from poor monetary policy.

Let’s have a wonderful day ahead.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 134 rated postsSenior Market Analyst at Etoro.com.




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