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Market Update: U.S. Stocks Struggle to Regain Ground Following Tumultuous Week; Bitcoin Stabilizes After Tether-Induced Spike

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U.S. stocks traded lower on Monday, as markets failed to sustain a rebound following last week’s massive rout. Cryptoassets traded firmly higher after Tether’s controversial stablecoin lost its peg to the U.S. dollar.

Stocks Settle Lower

The large-cap S&P 500 Index drifted between gains and losses before settling down 0.6% at 2,750.79. Most primary sectors reported losses, with information technology falling 1.4%. Shares of energy companies closed down 0.6%.

Underperforming tech shares put the Nasdaq Composite Index on a lower path. The index settled down 0.9% at 7,430.74.

The Dow Jones Industrial Average declined 89.44 points, or 0.4%, to close at 25,250.55.

The major indexes bounced back sharply on Friday but still finished firmly lower for the week with losses ranging from 3.7% to 4.2%.

Rising bond yields have placed downward pressure on stock markets over the past two weeks. Since hitting more than seven-year highs, the yield on the benchmark 10-year U.S. Treasury yield has fallen back below 3.20%.

Economic Data Mixed

U.S. retail sales rose much less than expected in September, though other measures of consumer spending signaled strong momentum heading into the fourth quarter. Receipts at retail stores nudged up 0.1% last month following a similar gain in August, the Department of Commerce reported Monday. Analysts in a median estimate had called for a gain of 0.5%.

However, stripping away automobiles, gasoline, food services and building materials, receipts rose 0.5%. So-called core retail sales are more closely aligned with the consumer spending component that drives more than two-thirds of gross domestic product.

Consumer spending is being aided by tax cuts and a surging labor market. The national unemployment rate fell to 3.7% in September, the lowest in 49 years.

A second report from the Commerce Department on Monday showed business inventories rose 0.5% in August after climbing 0.7% the previous month.

Bitcoin Trade Volumes Surge

Bitcoin’s 24-hour trade volumes surpassed $7 billion on Monday for the first time in six weeks as investors cut ties to USDT, a controversial stablecoin that is used as a quote currency in crypto transactions. The leading digital currency peaked at $7,788.00 on Bitfinex, which processes a large volume of USDT transactions. That peak was roughly $900 higher than the highest price observed on exchanges that do not offer USDT trades.

At last check, bitcoin still had a large premium on Bitfinex, with prices up 6.2% to $6,724. The price quoted on CoinMarketCap is $6,579. Total turnover in BTC across all digital currency exchanges spiked to $7.1 billion.

USDT was down more than 6% at $0.94, with investors seemingly losing confidence in the coin. The stablecoin would later recover around $0.973.

The cryptocurrency market cap reached a high of around $221 billion on Monday before paring a large chunk of those gains to reach $210 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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4.7 stars on average, based on 740 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

3 Things You Need to Know About the Market Today: Trade Rally, Pound Pullback, Tesla Worries

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1, Trade Optimism Drives Rally in Stocks, Oil

Shanghai Composite, 4-Hour Chart Analysis

The US government is mulling to lift or ease some of the trade tariffs on Chinese goods, at least according to the reports that surfaced yesterday, and although the rumors were promptly denied by the Treasury, risk assets have been pushing higher ever since. Global stocks are trading at 1-month highs, with understandably, the major US indices and China leading the way higher. We expect further gestures by the two sides in the coming weeks, as the talks progress, but a final agreement could still be months away.

The most affected commodities, such as copper and oil are also up today, and but as we noted this weekend, the oversold rally in risk assets is stretched now. Also, even as the weaker global benchmarks, such as the Shanghai Composite have joined the party, the clear economic slowdown and the bearish technicals make the current environment hostile for bulls

2, Pound Retreats After Hitting 2-Month High Above 1.30

GBP/USD, 4-Hour Chart Analysis

Besides the Trade War saga, the likely delay of the Brexit deadline has been making waves all week long, and Pound bulls seem to like the idea of a possible “soft” deal with the European Union. The currency hit its highest level against the Dollar since mid-November, topping the 1.30 level, while British stocks are also trading near their 2019 highs.

Prime Minister Theresa May pledged to include the opposition parties following Wednesday’s no-confidence vote, but for now, even starting the talks is challenging, even though the government labeled the first talks “constructive”. In any case, with the chances of a no-deal Brexit being low right now, the Pound could enjoy further gains, especially as long as the global risk rally lasts.

3, Tesla Disappoints With Guidance, Cuts Workforce by 7%

Tesla (TSLA), 4-Hour Chart Analysis

While it held up very well during the recent tumroil in the stock market, Elon Musk’s crown jewel, Tesla (TSLA) has been down by as much as 8% today in pre-market trading after warning investors that the electric car maker will likely turn a smaller-than-expected profit in the coming quarter. Tesla is struggling to ramp up the production of the Model 3, while also facing difficulties to hit its cost goal with regards to its “mass” product.

With the traditional car makers slowly but surely closing in on the company, and given the looming cash flow issues, the coming quarters will crucial for the Musk. The company just avoided bankruptcy in its early days, and some bears think that the fierce competition and the production issues could lead to a crisis yet again. The company’s workforce skyrocketed in recent years, and today CEO Musk also announced that it will lay off 7%, approximately 3000 workers, to cut costs after the expansion. He stated that,

“We unfortunately have no choice but to reduce full-time employee headcount by approximately 7%, we grew by 30% last year, which is more than we can support, and retain only the most critical temps and contractors (…)”

While today, earnings reports will be few and far between, Netflix (NFLX) will also be in focus after reporting yesterday in after-hours trading, and for now, the streaming giant is also trading lower despite the broad overnight rally in stocks.

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 443 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

Make it or Break it

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Hi Everyone,

In the United States at the moment, there are nearly 39 million people on food stamps. We already know that government workers are not getting paid during the shutdown but what now seems unclear is how the shutdown affects the poor.

For those of you who are not familiar with food stamps, this is the US government’s welfare program that provides food to poor people by giving them coupons that they can take to the store.

The thing is, the system is quite complex and varies for different states and different retailers. A few stores have already been forced to stop accepting food stamps due to the shutdown and some states have given their citizens an advanced payment.

For now, it seems that only a small number of people have actually been affected but with some analysts predicting that the shutdown could last for several more months, the future seems incredibly uncertain and information is hard to come by. So it’s worth keeping an eye on this development as it could potentially affect several areas of the US economy and the broader market.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Shutdown: Day 28 | Days to Brexit: 70
  • 10 Year Challenge
  • Russia’s Real Crypto Plans

Please note: All data, figures & graphs are valid as of January 18th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The markets were relieved yesterday by the news that…

This is a good indication that US-China trade talks are going well and seeing any sort of concessions from the White House, or even the indication that there may be concessions, is cause for celebration among investors.

The positive sentiment has carried through the Asian session and well into European trading.

Risk On

With the rise in stocks, we’re seeing some of the hallmarks that show investors are looking to take on more risk today.

Gold has managed to pull back from the $1,300 resistance level and oil is testing new highs, despite an IEA report that expects over-production to continue.

Perhaps the biggest indication of risk on sentiment today is coming from the USDJPY, which has now stepped over the 109 level as traders sell the Yen for the Greenback.

Next weekend is likely to start with a bang!

Just a few hours after markets open and before most western investors have opened their eyes, China will report some critical GDP growth data. As the China slowdown has become a prevalent theme in the markets recently this single data point can be a make it or break it moment.

Russia’s Real Crypto Plans

Last week, in one of our daily market updates (titled: Digital Reserves), we discussed a rumor that was circulating in the crypto community that the Central Bank of Russia may be planning to add bitcoin to its national reserves.

Well, it turns out Elina Sidorenko, the chairperson for the government committee for overseeing cryptocurrencies, has now clarified that while Russia might want to do this, it could be another 30 years before this becomes a reality.

As we correctly noted in the daily update at the time, the major setback here is that there is currently no legal framework for doing this. However, from what I understand, the idea of setting up a national CryptoRuble is being discussed among government officials and could very well happen within the next couple of years.

In any case, we do know that the government of Russia is watching the crypto space quite closely. Dimitry Medvedev was quoted just yesterday as saying that the bear market doesn’t spell the end of crypto.

Spoken like a true crypto advocate!!

Have an amazing weekend.

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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4.6 stars on average, based on 143 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

U.S. Stocks Surge as Trump Administration Weighs Ending Trade War With China

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U.S. stocks turned higher Thursday afternoon amid reports that Washington was considering lifting tariffs on Chinese goods to expedite a trade deal with Beijing. Cryptocurrencies headed for another mediocre session overall, though altcoins showed modest upside toward the end of the session.

Stocks Extend Recovery

All three of Wall Street’s major indexes finished in positive territory, extending their winning streak to three days. The Dow Jones Industrial Average gained 163.08 points, or 0.7%, to 24,370.24, its highest settlement since Dec. 13.

The broad S&P 500 Index climbed 0.8% to finish at 2,635.96. All 11 primary sectors finished with positive results, with materials and industrials leading the way higher.

A strong performance in technology shares lifted the Nasdaq Composite Index to gains of 0.7%, where it finished at 7,084.46.

The indexes have gained more than 11% since Christmas Eve, when they traded at more than one-year lows. The S&P 500 and Nasdaq briefly entered bear-market territory in one of the worst quarters since the financial crisis.

End of the Tariff War?

The United States is strongly considering easing tariffs on China in an effort to broker a new trade deal before the self-imposed Mar. 1 deadline. According to The Wall Street Journal, U.S. officials would like to give Beijing bigger incentive to make bigger concessions in the next round of negotiations.

Both sides held face-to-face meetings last week, with China agreeing to open up its domestic market to U.S. companies and purchase more American-made farm and energy commodities. Further talks are planned in the coming weeks.

The Mar. 1 deadline reflects the 90-day truce period agreed to by President Trump and China’s Xi Jinping in December. After meeting on the sidelines of the G20 summit in Buenos Aires, both leaders committed to ending the trade war and returning to the negotiating table.

Cryptos See Modest Upside

The cryptocurrency market saw the narrowest of gains Thursday thanks to a late rally by altcoins and tokens. Bitcoin cash rose 1.3% to $130.63, EOS added 3% to $2.51 and Tron gained 4% to $0.0258. Outside the top ten, IOTA, Binance Coin and Ethereum Classing gained between 2% and 5%.

Bitcoin, the largest cryptocurrency of all, rose 0.6% to $3,667.38. As we reported earlier, bitcoin continues to cling to $3,600 but a failure to extend gains beyond $3,750 could set the tone for another downward correction.

Cryptocurrencies as a whole reached a value of $122.4 billion, according to CoinMarketCap. That represents a gain of about $800 million from 24 hours earlier.

In roughly one month’s time, the crypto bear market will become the longest in history, according to CNBC’s Ran NeuNer. Thursday was day 391 of the bearish trend. The previous record, set in 2015, was 420 days. Relevant reading: Longest Bear Market in Crypto History?

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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4.7 stars on average, based on 740 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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