Wall Street slips - Bitcoin tests $60K with the halving approaching fast
All three major U.S. stock indexes declined in choppy trading on Wednesday as investors assessed the U.S. Federal Reserve's interest rate stance at the start of the financial reporting season amidst disappointing earnings reports.
At the close of the New York Stock Exchange (NYSE), the Dow Jones Industrial Average dropped -45.66 points, or -0.12%, ending at 37,753.31.
The broad-based Standard & Poor's 500 Index declined by -29.20 points, or -0.58%, closing at 5,022.21, marking its longest decline in just over four months.
Meanwhile, the tech-heavy Nasdaq Composite Index fell by -181.88 points, or -1.15%, ending at 15,683.37.
Wednesday witnessed the third consecutive session of stocks opening higher, only to decline as the day progressed, with technology stocks bearing the brunt of the downturn.
Given this recent price action on Wall Street, investors are exercising caution by "trimming some of the high fliers" in the market.
The cautious approach is fueled by the notable decline in AMSL stock following disappointing earnings, which had a ripple effect, putting pressure on the high-flying chip sector.
Notably, leading chip companies such as Advanced Micro Devices, Applied Materials, Lam Research, KLA, and Nvidia, all recorded losses for the day.
Reflecting the broader weakness in the semiconductor industry, the iShares Semiconductor ETF dropped -3%, while Broadcom saw a notable decline of -3.5%.
Among the "Magnificent Seven," Alphabet saw a gain of +0.6%, while Amazon, Meta, and Tesla experienced declines of -1.1%. Microsoft lost -0.7%, Apple dropped -0.8%, and Nvidia sank -3.9%.
United Airlines emerged as the standout gainer, surging more than +17% after reporting a narrower-than-expected loss and exceeding revenue expectations.
Meanwhile, Donald Trump's social media company's stock continued its volatile trajectory, surging by +15.6% after two consecutive days of losses exceeding -14%.
Despite U.S. stocks’ upward trajectory over the past four months, the market has needed earnings to boost it. However, April has presented some disappointment for investors thus far.
With little expectation of near-term assistance from a reduction in interest rates, companies will need to generate larger profits to validate the significant increases in stock prices moving forward.
This underscores the importance of strong earnings performance in justifying current stock valuations.
Traders are currently anticipating only one or two interest rate cuts from the Federal Reserve this year, a notable decrease from earlier forecasts of six or more at the beginning of the year.
The widespread anticipation of a Fed rate cut in June has reduced the likelihood of a 25 basis points cut to around 15%/16%. Similarly, expectations for a rate cut in July have decreased to around 40%.
Fed Board Governor Michelle Bowman and Cleveland Fed President Loretta Mester are scheduled to speak later today.
Meanwhile, in the U.S. government bond markets, the yield on the 10-year Treasury, which helps set rates for mortgages and other economy-dictating loans, finished at 4.59%, while the policy-sensitive two-year yield, which tends to reflect market expectations of future Fed moves, closed at 4.94%.
In the crypto universe, Bitcoin, the largest digital currency, faced challenges as it extended its decline and briefly dropped below US$60,000.00 before recovering some losses.
Some traders remain cautiously optimistic about BTC, eyeing the key support area around US$56,000.00 and US$58,000.00.
Bitcoin traded in an intraday range of US$59,820.00 to US$64,451.00 before settling at US$61,234.00.
Despite the recent price decline from its peak at US$72,000.00, Bitcoin is still within the pre-halving "trading zone," with support estimated between US$56,000.00 and US$58,000.00 and resistance between US$78,000.00 and US$81,000.00.
As Bitcoin's halving event draws nearer, scheduled to occur once every four years, it is increasingly regarded as a pivotal factor in supporting the cryptocurrency's value.
This software update, known as the "halving," involves cutting the reward given to Bitcoin miners in half, thereby reducing the rate at which new Bitcoins are created.
As the halving event approaches, which is scheduled around April 19/20, it will reduce the amount of Bitcoin that "miners" can earn daily for validating transactions.
Market participants are closely monitoring the potential impact of the halving event on supply and demand dynamics, anticipating its influence on Bitcoin's price trajectory.
Traders and investors should exercise caution due to expected high volatility.
It's crucial to monitor new developments and adapt trading strategies to market fluctuations.
Therefore, staying informed and adapting to changing markets is crucial for decision-making in dynamic environments.
Meanwhile, Ethereum, the second-largest blockchain in terms of cryptocurrency market capitalization, traded within a daily range of US$2,917.00 to US$3,123.00 before closing at US$2,979.00.
Precious metal prices experienced another volatile session, reversing earlier gains as waning rate cut expectations diminished the appeal of the safe-haven metal.
Gold settled at $2,365 per ounce, while silver closed at $28.12.
Energy market prices extended their decline for a third consecutive session, continuing the retreat from last week's highs.
The global benchmark Brent crude oil settled at $87.50 per barrel, while the U.S. benchmark West Texas Intermediate settled at $82.20.
The U.S. Dollar Index (U.S. DXY), which measures the dollar's strength against six major foreign currencies in the forex market, pulled back from its five-month high of 105.90.
Meanwhile, the Eurodollar was 1.0668, and the British pound finished at 1.2452. The Japanese yen ended at 154.34, while the Australian dollar was at 0.6440.
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