Cryptos Continued Momentum; Stocks Mixed After Multi-Week Rally: Markets Wrap

It’s been a weeks-long rally with choppy trading for Wall Street indices as investors digest a slew of Federal Reserve news, economic projections and other announcements on Tuesday. Despite concerns of looming interest rate hikes after the Fed’s semi-hawkish June announcement, most US stocks continued to uptick with ebbs and flows. All gauges were up by market close.

Many point to the boost in consumer confidence as a catalyst to the intraday rally, according to a report by The Conference Board on Tuesday morning. The index soared 127.3 points in June, the highest it has been since February of last year, signaling sentiments of optimism for the country’s pandemic recovery. 

More buoyancy ensued as Morgan Stanley announced that they doubled their dividends and will buy $12 billion in their own stock after the Federal Reserve revealed that all 23 financial institutions passed its annual stress tests. Other mammoth banks such as Goldman Sachs hiked dividends up 60% as well. 

In contrast, the tech-heavy Nasdaq Composite Index made small gains and losses changing little intraday. However, this comes at a time when Facebook hit a first-time market cap of over $1 trillion on Monday. Some investors may still be weary, anticipating future market volatility, after the CBOE SKEW index hiked to the highest it has been in 30 years on Monday.

Equities

• The Dow was little changed, up 0.04% to 34,298.
• S&P 500 inched up 0.02% to 4,291.
• Nasdaq was up 0.17% to 14,525.

Insight

“We have further to run when it comes to equities, but I think there is some form of summer lull coming and it could be that we see some zigzagging,” said Daniel Egger, chief investment officer at St. Gotthard Fund Management in an interview with the Wall Street Journal. “I wouldn’t be surprised to see an air pocket coming when markets pull back a little.”

Cryptocurrencies continue to climb despite recent regulatory crackdowns worldwide. Bitcoin faces resistance at $40,000 after last week’s volatile shakeout, where the largest crypto briefly fell below $29,000.

Ethereum made further gains after jumping 17%, following the news that the Financial Conduct Authority would ban all exchanges on Binance Market Limited, a subsidiary of Binance, in the UK on Monday. The crypto exchange said that the ban is still accessible within the country, appearing to have little downside for the asset class at-large. Ether hiked around 6% again on Tuesday.

Some attribute part of the digital currency’s uptick to billionaire and chairman Ricardo Salinas Pliego’s tweet. Pliego said that his bank, Banco Azteca, is “working” to become the first bank to accept crypto in Mexico, Blockworks reported on Monday. Following the news, bitcoin hiked 7%.

Crypto

• Bitcoin is trading around $36,300.11, rising 4.72% in 24 hours at 4:00 pm ET.
• Ether is trading around $2,218.21, up 4.03% in 24 hours at 4:00 pm ET. 
• ETH:BTC is at 0.061, up 1.09% at 4:00 pm ET.
• VIX is up 2.86% to 16.21 at 4:00 pm ET.

Insight

Laurin Bylica, Co-Founder of TheStandard, weighed in on FCA’s recent clampdown on the digital asset.

“It will be an endless cat and mouse game between regulators and crypto businesses if regulators try to control every single step of the evolving technology. For example, let’s imagine what would have happened to the internet if every single website that goes live would require the prior approval of regulatory authorities,” Bylica said in an email. “So education instead of regulation is my suggestion to governments worldwide.”

Fixed Income

• The US 10-year yields 1.48% as of 4:00 pm ET.

Commodities

• Crude oil sits at $73.42 per barrel, inching up 0.71%.
• Gold is down -1.07% to $1,760.60.

Currencies

• The US dollar strengthened 0.21%, according to the Bloomberg Dollar Spot Index.

In other news…

Cathie Wood’s Ark Investment Management and 21Shares filed for a bitcoin ETF on Monday, Blockworks reported. However, the SEC has veto’d all crypto ETF applications thus far, citing issues with pricing and security, which can pose challenges given the 24 hour trading cycle of the digital asset class. 

We’re watching out for …

• OPEC’s meeting will be on Thursday.
• Jobs Report will be released on Friday.

That’s it for today’s markets wrap. I’ll see you back here tomorrow.