U.S. Stocks Capitulate as Nasdaq Teeters on Bear Market

U.S. stocks plunged anew Thursday, dragging the Nasdaq Composite Index dangerously close to bear-market territory for the first time since 2009. Meanwhile, cryptoassets held on to newly acquired gains as bitcoin made a push beyond $4,000.

Stocks Approach Bear Market

All of Wall Street’s major indexes marked new lows for the year. The Dow Jones Industrial Average plunged 464.06 points, or 2%, to close at 22,859.60. All but one of the index’s constituents reported losses, led by Walgreens Boots Alliance Inc. (WBA), United Technologies Corp (UTX) and Walmart Inc. (WMT).

The much broader S&P 500 Index fell 1.6% to 2,467.42, with ten of 11 primary sectors finishing in the red. Energy was the worst performer, falling 2.8% as a sector. The S&P 500’s consumer discretionary component finished down 2.3%.

The Nasdaq Composite Index declined 1.6% to 6,528.41. The tech-laden average is within half a percentage point of a bear market, which is defined as a drop of 20% or more from a recent high.

Markets Capitulate

Volatility has gripped equity markets for much of the fourth quarter, as overvaluation risks and global growth woes undermined investors’ sentiment following a record-setting Q3. The fear of rising interest rates has taken hold recently after the Federal Reserve moved to raise interest rates for the fourth time this year. In doing so, the central bank signaled that two more upward adjustments are likely in 2019, which was higher than what analysts had expected.

The accelerated plunge in stock prices is aptly reflected in the CBOE Volatility Index. Commonly known as the VIX, this indicator tracks the market’s expected volatility over the next 30 days. VIX climbed above 30 on Thursday on a scale of 1-100 where 20 represents the historic average. This likely means further turbulence up ahead for stocks.

Cryptos Stabilize

The cryptocurrency market enjoyed further upside on Thursday, as bitcoin clawed back above $4,000 and bitcoin cash extended its streak of massive gains. The total market capitalization currently hovers around $130 billion, having gained $30 billion from the weekend low. Trade volumes surpassed $25 billion, indicating strong demand on virtual currency exchanges.

With the exception of Tether, a dollar-backed stablecoin, all major cryptocurrencies in the top-10 had reported gains Thursday afternoon. Bitcoin is up nearly 6% over the last 24 hours to trade just below $4,000. Prices surged toward $4,300 on Bitfinex earlier in the day.

Ethereum climbed 8.6% to $111.78. XRP added 2.5% to trade at $0.3685.

Bitcoin cash was by far the biggest winner on Thursday. The fourth-largest cryptocurrency by market cap surged 35% to $179.57, extending its winning streak to six days.

Litecoin rallied 5.7% to $31.80. Stellar XLM climbed 4% to trade at $0.1219.

Outside the top-10, IOTA rose 12.5% to $0.3222. Dash’s price added 12.3% to reach $86.38.

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