U.S. Stocks Bounce Back on Trade Optimism; Crypto Meltdown Resumes

Stocks rose sharply on Monday, buoyed by optimism that the U.S. and China were making progress toward a new free trade agreement. Cryptocurrencies headed in the opposite direction, undoing much of last week’s rally as bitcoin fell below $3,900 once again.

Benchmarks Rise

All of Wall Street’s major indexes opened firmly higher, with the Dow Jones Industrial Average adding more than 400 points through the early morning session. The blue-chip index settled with a gain of 288.03 points, or 1.1%, to close at 25,826.49.

The much broader S&P 500 Index climbed 1.1% to finish at 2,790.37. Nine of 11 primary sectors finished higher, led by energy and consumer discretionary shares. Information technology also rose sharply, extending last week’s impressive recovery.

The tech-driven Nasdaq Composite Index climbed 1.5% to 7,441.51.

Trade Optimism Builds

President Trump and China’s Xi Jinping have made strides to resolving their bitter trade dispute following weekend talks in Buenos Aires, Argentina. China has vowed to cancel proposed tariffs on U.S. automobiles in exchange for an extended grace period on $200 billion worth of U.S.-bound imports. Trump announced that the proposed duty hike on Chinese goods slated for Jan. 1 will be put on hold indefinitely to allow both sides to negotiate a new deal.

Despite the good gestures, both countries remain locked in a trade war that will take considerable effort to overcome. The biggest takeaway from Buenos Aires is the 90-day truce both leaders agreed to pursuing. Trade talks are expected to ramp up over that period.

Optimism that both sides are making progress rubbed off on the commodity markets Monday, as oil prices surged to their highest level in almost two weeks. The impasse over free trade and its impact on global economic health have weighed heavily on crude markets the last two months.

Cryptocurrencies Fall Anew

The cryptocurrency market plunged anew on Monday, as bitcoin and the major altcoins/tokens experienced a brisk technical selloff. The combined value of all coins reached a low near $125 billion, a reversal of $17 billion from last week’s high.

Bitcoin fell through the $4,000 support level en route to fresh six-day lows. Market-wide data collected by CoinMarketCap show a daily drop of 7.2% to $3,886.

Every one of the majors in the top 20 by market capitalization finished in the red. In percentage terms, EOS was the biggest loser, shedding 12.1% to $2.60. Monero’s XMR currency dropped 10.8% to $54.13.

Ethereum and Stellar XLM each fell more than 7%. The ETH price was last valued at $108.24 while XLM settled just below $0.1500.

The crypto market finished November deeply in the red and its recent performance casts doubt about the potential for a late-year rally. Bitcoin has registered firm gains in each of the last three December months, including a record-setting run last year.

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.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi