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Market Update: U.S. Stocks Sputter in Final Hour as Morgan Stanley Warns on Tech Shares

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U.S. stocks declined on Thursday, with the Nasdaq giving back earlier gains after Morgan Stanley issued a fresh warning on overstretched technology companies.

Nasdaq Recoils from Record Territory

The Nasdaq Composite Index closed at 7,891.78, where it was virtually unchanged compared with the previous close. The tech-driven index is by far Wall Street’s best performing average this year, rising 14.3% since January.

The broader S&P 500 Index edged down 0.1% to 2,853.58, with losses mainly concentrated in energy, financials and industrials shares. A total of six S&P 500 sectors finished in negative territory.

Dow industrials fell 74.52 points, or 0.3%, to close at 25,509.23. A total of 16 index members finished in negative territory.

Morgan Stanley Warns on Tech Stocks

U.S. investment bank Morgan Stanley has issued a fresh warning on semiconductor stocks, adding to an already negative outlook on the technology sector.

Cyclical indicators are flashing red,” analysts wrote in a report, as quoted by Bloomberg. “Elevated inventory and stretched lead times leave no margin for error as any lead time adjustment or demand slowdown could drive a meaningful correction.

The high-flying tech sector ran into volatility last month amid mixed corporate earnings and a gradual shift away from growth stocks. The sector remains by far the best performing S&P 500 component of the past year but could face headwinds now that China is ramping up its trade war rhetoric.

Cryptocurrency Market Bounces from Yearly Low

Cryptocurrency prices including bitcoin staged a modest relief rally Thursday after a 24-hour selloff wiped more than $35 billion from market values.

The cryptocurrency market’s total capitalization reached a high of $230.3 billion after bottoming near $219 billion earlier in the day. Trade volumes averaged more than $13 billion, according to CoinMarketCap.

All major crypto assets in the top-ten reported gains Thursday. Bitcoin added 2.6% to $6,509, Ripple XRP gained 2.8% to $0.345 and bitcoin cash finished 2.2% higher at $604.

Although the market remains in a firm downtrend, reaction to the SEC’s decision to delay a ruling on a bitcoin exchange-traded fund was likely overdone. Bitcoin and other cryptos are still entrenched in oversold territory, which suggests that a short-term recovery is possible. Long-term holders should take solace in the fact that crypto assets are attracting a bigger market with the introduction of custody services and the entry of major stock exchange operators into the space.

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 736 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

U.S. Stocks Rise on News of China Stimulus; Theresa May’s Brexit Deal Falters in British Parliament

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Wall Street and global stocks bounced back on Tuesday, as investors rallied behind a renewed stimulus push from the Chinese government in the wake of dismal trade figures earlier in the week. Meanwhile, U.K. Prime Minister Theresa May’s proposed Brexit deal was swiftly rejected by British parliament, setting the stage for a tumultuous two months.

Stocks Rally

All of Wall Street’s major indexes bounced back on Tuesday from a slow start to the week. The S&P 500 Index gained 1.1% to 2,610.30, with nine of 11 primary sectors reporting gains. Technology, health care and communication services were the best performers. Surging tech shares lifted the Nasdaq Composite Index to a gain of 1.7%, where it closed at 7,023.84. The Dow Jones Industrial Average advanced 155.75 points or 0.7%, to close at 24,065.59.

European and Asian markets also reported firm gains. The U.K.’s FTSE 100 Index rose 0.6% to 6,895.02. The pan-European Stoxx 600 finished 0.4% higher at 348.71.

Japan’s Nikkei 225 index rose 1% to 20,555.29. Mainland China markets surged 2%, with the CSI 300 Index closing at 3,127.99.

China Pledges More Stimulus

The rally in global stocks on Tuesday was partly owed to a renewed pledge by the Chinese government to stimulate a moribund economy. China’s finance ministry has announced a new plan to cut taxes and increase federal expenditures this year in an attempt to combat weaker growth. Meanwhile, the People’s Bank of China (PBOC) said it will make monetary policy more forward-looking and ensure that markets don’t face a liquidity crunch in the future.

In reality, China’s economic slowdown appears to be inevitable as Beijing shifts from exports and manufacturing toward consumption and services. This generational transition will likely see GDP growth decline further in the coming yeas as China’s middle class continues to grow. However, the presence of asset bubbles and a worsening trade outlook could hasten the decline.

May’s Brexit Deal a No-Go

British lawmakers overwhelmingly rejected Prime Minister Theresa May’s Brexit deal on Tuesday, setting the stage for a political fallout that could threaten the U.K.’s planned exit from the European Union in March.

The Brexit deal was soundly rejected in British parliament by a vote of 432 to 202. The scale of the defeat highlighted the extreme opposition facing the prime minister from both sides of the political divide. By failing to agree on the terms of Brexit, the U.K. faces an uncertain future with respect to the EU.

May still has three options for salvaging an exit agreement: (1) negotiate new terms with the EU and table a slightly different proposal; (2) hold a second referendum; and (3) call a general election.

Since taking over from David Cameron in 2016, May has faced an uphill battle satisfying living up to the hard Brexit mandate while also satisfying the pro-EU opposition. A botched early election in 2017 relegated her party to minority status in Parliament, which further complicated matters.

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 736 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

Moment of Truth

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Hi Everyone,

What can I say? The adoption of crypto by large scale financial institutions is taking longer than expected but is still on track.

The bear market certainly caused some to hesitate but today we have confirmation that things are moving forward as planned.

The Wall Street backed service Bakkt, which plans to allow clients to store and spend crypto in a user-friendly and secure way, has clearly demonstrated that they are going ahead despite delays caused by the partial US government shutdown.

In this blog post yesterday, Bakkt CEO Kelly Loeffler announced their first strategic acquisition. The Chicago based company they’re buying is Rosenthal Collins Group, which boasts more than 100 years experience in the financial services industry. The deal, which is set to be finalized next month, will see RCG’s team completely integrated into the young crypto company.

Meanwhile, in Switzerland, a country that is way ahead of the curve on crypto adoption, a major financial institution known as Vontobel has announced their own crypto custodial service and digital asset vault, which is available for their clients now.

My friends, institutional adoption of cryptoassets is finally upon us.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Shutdown: Day 25
  • Brexit Vote Day
  • Ethereum Upgrade Tonight

Please note: All data, figures & graphs are valid as of January 15th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stocks are up today on the news that China will be following in Trump’s footsteps and stimulating their economy with massive tax cuts.

As economic conditions tighten around the world, one of the only solutions left for many countries to encourage spending is to cut taxes.

Of course, the long term effect of these type of actions is usually to increase the national deficit as the world’s largest economies sink further into staggering debt. But that doesn’t necessarily need to be an issue as long as they keep making their payments on the debt.

The rally seems to be holding into the European session and even the safe havens like Gold, Swiss Francs, and the Yen are pulling back.

Today is the 25th day of the partial US government shutdown with no end in sight. We’ll also hear from Mario Draghi at 16:00 in France. Let’s hope for some strong earnings reports from the financial sector today and tomorrow.

Brexit Vote

Bigger than all of that though, at least in the UK, is the critical vote on Theresa May’s Brexit plan, which is scheduled to take place around 19:00 London time.

Consensus seems to be that the vote will not carry and some are even predicting the worst upset for a Prime Minister in British History, which does seem a bit exaggerated to me.

Due to the potential impact on the markets many brokers, including eToro, have limited the maximum allowed leverage going into the event on all UK stocks and most major currency pairs. For details of how trading will be affected, please check out @eToroTeam page for updates.

Something tells me though, that this may not be as big as people are preparing for. First, the fact that brokers are limiting leverage in itself should reduce volatility. Second, if the announcement is already set to upset then there shouldn’t be much surprise to the markets. You never know though.

Upgrade Time for ETH

At block #7080000, which should happen sometime tomorrow night, the Ethereum network will undergo a hard fork.

Hard forks might seem difficult to understand because we’re so used to centralized computing, but in a decentralized world, the only way to make a major upgrade is to fork it.

For example, when Microsoft wants to upgrade from Windows 9 to Windows 10, they have their dev team write the code, and then users upgrade one by one in their own time. In decentralized computing, the entire network needs to upgrade together.

A hard fork is like a copy-paste action, where a new blockchain is born and if all goes well, the old one dies.

Sometimes, when there is a disagreement among the community about the upgrade, some members will choose to keep the old version of the blockchain alive and we see a split. The most famous cases of this was when Bitcoin Cash split off of Bitcoin on August 1st 2017 and when Ethereum split with Ethereum Classic back in 2016.

However, the Constantinople upgrade has already received widespread backing from the entire community and so we hope everything goes smoothly. It’s important to note that there is no action required by the end users. If you are holding ETH on eToro or any wallet or exchange, the upgrade should be done for you automatically.

By this time on Thursday, we should have a brand new Ethereum, which is faster, cheaper, and has 33% less inflation.

Let’s have an excellent day.

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 LinkedInMatiGreenspan |Facebook:MatiGreen

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 142 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

U.S. Stocks Tumble on Weak China Data; Cryptocurrencies Make a Sudden Move Higher

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U.S. stocks declined on Monday, with the major indexes struggling to overcome a volatile start after dismal Chinese data cast a dark shadow over global economic growth. Cryptocurrencies erased their weekend losses after bitcoin made a sudden move higher midday.

Stocks Stumble

Wall Street’s major averages settled lower by Monday’s close after spending the entire session in the red. The Dow Jones Industrial Average managed to pare its losses down to 86.11 points, or 0.4%, to close at 23,909.84. The large-cap S&P 500 Index fell 0.5% to 2,582.41. It was down as much as 1% in the early morning. The technology-heavy Nasdaq Composite Index closed down 0.9% at 6,905.91.

Earnings season began in earnest on Monday after Citigroup Inc. (C) reported better than expected quarterly profits. The big U.S. bank made $1.61 in per-share earnings on revenue of $17.12 billion. Despite beating per-share earnings by six cents, sales missed analysts’ target of $17.48.

China’s Economy Suffers Another Blow

China’s economic perils intensified last month, as exports plunged at the fastest rate in two years. Overseas shipments declined 4% annually in December, confounding expectations of a 3% gain, the General Administration of Customs reported Monday. Imports plunged 7.6% year-over-year compared with forecasts calling for 5% growth.

Beijing’s trade surplus with the United States reached its highest level in over a decade, a possible indication that trade-war fears have been overblown. China’s 2018 surplus with the U.S. jumped 17% from a year earlier to reach $323.32 billion, official data showed.

President Donald Trump told reporters on Monday that his administration is very likely to reach a new trade agreement with China. The optimism extends from last week’s bilateral talks, which went on for a day longer than planned. Both sides made important progress on the purchase of U.S. energy commodities as well as increased access to Chinese markets.

“We’re doing very well with China,” Trump told reporters Monday, according to Reuters. “I think that we are going to be able to do a deal with China.”

Cryptos Bounce

A weekend of heavy selling in the cryptocurrency market came to an abrupt end on Monday, as bitcoin and its altcoin peers pivoted sharply higher midday. Between Sunday and Monday, the cryptocurrency market capitalization rose $8 billion peak-to-trough. It was last valued at $23.9 billion, according to CoinMarketCap.

Bitcoin once again bounced off the $3,500 price floor to retake $3,700. The move higher may have staved off a more severe drop in the short term. The bears have been eyeing a sustained drop below $3,550, a long-term inflection point for the bitcoin price. At last check, bitcoin was up 4.3% at $3,709.36.

News Flash: Crypto Markets Swing Higher as Bitcoin Climbs Above $3,700

As one would expect during a bear market, altcoins and tokens quickly followed in bitcoin’s footsteps Monday afternoon. With the exception of dollar-backed stablecoins, all major cryptocurrencies reported gains. Ethereum jumped 10.3% to $128.65, where it was just shy of XRP in terms of overall market cap. The XRP price rose 4.9% to $0.3334.

Other big gainers included EOS, which rose 9.5% to $2.47, and Tron, which added 15.9% to $0.2468.

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 736 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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Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

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