Stocks and Crypto Rise in Unison as XRP Takes the Reigns
The U.S. stock market extended its rally on Friday, with the benchmark S&P 500 securing its longest winning streak in over a year, a strong sign that the bulls were eyeing fresh record highs. After a brief pause, cryptocurrencies also returned to strength with XRP leading the charge.
Stocks Eye Record Highs
All of Wall Street’s major indexes catapulted to fresh yearly highs on Friday, with the S&P 500 Index approaching record territory. The index of large-cap stocks came within seven points of 2,900 and would later settle at 2,892.72 for a gain of 0.5%. Energy stocks led nine of 11 primary sectors higher.
The technology-focused Nasdaq Composite Index rallied 0.6% to finish at 7,98.69.
After rallying more than 100 points, the Dow Jones Industrial Average pared gains to settle up 40.56 points, or 0.2%, at 26,425.19.
The CBOE Volatility Index, commonly known as the VIX, approached its lowest level in five months. VIX bottomed at 12.17 on a scale of 1-100 where 20-25 is considered normal. The volatility gauge completed a bearish crossover last month, setting the stage for another record run for U.S. stocks. On Friday, VIX settled down 5.6% at 12.82.
Nonfarm Payrolls Ease Recession Fears
The U.S. labor market kicked into higher gear last month, as employers added more workers than expected and joblessness held steady despite a slight uptick in workforce participation. Employers added 196,000 workers to payrolls in March compared with forecasts calling for 180,000, the Department of Labor reported Friday. The February increase, initially reported as 20,000, was revised up to reflect a gain of 33,000.
Unemployment held steady at 3.8% as workforce participation improved to 63% from 62.9% previously. The workforce participation rate reflects the percentage of Americans employed or actively searching for work.
After better than expected growth in February, wages lagged forecasts in March. Average hourly earnings, a key proxy of wage inflation, edged up 0.1% on month and 3.2% annually. Analysts had called for a monthly increase of 0.3% and an annual increase of 3.4%.
Earnings Season Underway
Beginning next week, investors’ attention will shift to corporate earnings as several S&P 500 companies begin reporting on their first-quarter results. The most notable results are due on Friday when JPMorgan Chase & Co (JPM) and Wells Fargo & Co (WFC) are scheduled to report.
For the first time since 2016, corporate earnings as a whole are expected to decline compared to a year ago. According to FactSet, energy, materials and information technology are likely to see the biggest decline in year-over-year profitability.
A weak earnings quarter may undermine stocks at a time when record highs appear imminent. The bulls are banking on a new U.S.-China trade deal and a seasonal drop in volatility to sustain the next leg of the rally.
Crypto Rally Regains Momentum
After a brief midweek pause, bitcoin and its altcoin peers continued higher on Friday, a sign that ‘crypto spring’ was in full swing.
Twenty-nine of the top 30 cryptocurrencies by market cap reported gains. Bitcoin (BTC) climbed 3% to $5,024.33, extending its weekly gain to almost 23%. Ethereum (ETH) rose 4.8% to $163.66.
Among the majors, XRP (XRP) was the biggest gainer percentage-wise, adding 9% to $0.3607. Like ether, the so-called banker’s cryptocurrency has underperformed many of this peers this week.
Bitcoin cash (BCH) and Litecoin (LTC) are this week’s top performers. On Friday, BCH jumped 4.2% to $290.48 and has now gained a whopping 71% this week. Litecoin is currently up 6.3% to $87.82 and has returned 43.5% this week.
Read Hacked’s weekly review – Crypto Spring is Finally Here: Mystery Order Sparks Massive Bitcoin Rally as Altcoins Follow Suit.
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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