Neither the Dow nor the bitcoin price looks like it has the momentum to begin clawing back Monday’s losses, as both the stock market and the large-cap cryptocurrency index are flashing little movement ahead of the US trading session.
As of am 8:42 am ET, Dow Jones Industrial Average futures had gained 70 points or 0.29 percent, implying a rise of 49.78 points when the markets open. The index had steeled itself for an opening bell decline but fought back into the green on the back of strong pre-market earnings reports from 3M and Pfizer.
S&P 500 and Nasdaq futures each traded sideways, with the former up 0.13 percent and the latter increasing by 0.23 percent. Both looked poised to post minor advances at the open.
All three major stock market indices suffered steep losses on Monday amid ongoing concerns related to the US government shutdown — which President Donald Trump says may receive a sequel in the coming weeks — and the US-China trade war, which is beginning to take a toll on industrial stocks like Caterpillar.
The Dow ended the day more than 200 points in the red at 24,528.22 for a single-day loss of 0.84 percent. The S&P 500 performed slightly better, dropping 20.91 points or 0.78 percent to 2,643.85, but the Nasdaq slid a full 1.11 percent. Following another such day, the Nasdaq, which currently stands at 7,085.69, could dip below the 7,000 mark.
The gold and oil prices, conversely, each made moderate strides on Monday, with the yellow metal rising 0.27 percent to $1,306.60 and oil climbing 0.69 percent to $52.35
On Tuesday, Wall Street will continue to watch both the ongoing trade war and its impact on the US stock market.
Shortly after Monday’s closing bell, the US Department of Justice filed a litany of criminal charges against Chinese telecom giant Huawei and its CFO, Meng Wanzhou.
While White House officials maintained that the charges would have no impact on bilateral trade negotiations between the US and China, analysts worry that China will take retaliatory measures and that the trade talks will break down. Unless the two sides reach an agreement by the beginning of March, billions of dollars in tariffs will kick in, which could further roil the stock market as it continues to make an uneven recovery from last quarter’s sell-off.
Investors are also holding their breath ahead of Apple’s quarterly earnings call, which will take place at 5 pm ET on Tuesday. The Silicon Valley tech giant already slashed its quarterly guidance, blaming both the trade war and China’s economic slowdown for sluggish iPhone sales. E-commerce behemoth eBay will also publish its Q4 earnings results today.
Fresh off Monday’s multi-billion dollar sell-off, the cryptocurrency market took further losses on Tuesday, and technical analysts warn that bitcoin price could face a stiff drop from its current level near $3,400.
Traders including former IMF economist and bitcoin bear Mark Dow said that the drop below $3,500 represented the first leg in another full-scale sell-off, and even bulls have begun to resign themselves to the fact that support at $3,000 may not hold.
On the other hand, analysts including eToro’s Mati Greenspan have argued that the drop below $3,500 was less significant than advertised, stating that the bitcoin price continues to range-trade between $3,000 and $5,000, as it has since last November.
Writing in daily market commentary made available to CCN, Greenspan said that it looks like crypto traders are “taking their foot off the gas a bit.” As evidence, he noted that USD-pegged cryptocurrency “stablecoin” tether (USDT) now ranks as the fourth-largest cryptocurrency.
He also stated that while the number of bitcoin short positions on Bitfinex has dropped in January, it has not resulted in a comparable increase in the number of traders who are going long.
“A neutral position could very well be a sign of good things to come as it might just signal that the bears are finally letting up,” he said.
In any case, bitcoin is now just days away from having endured its longest bear market in history, and the selling still shows no definitive signs of letting up.
As of the time of writing, bitcoin was trading at $3,393 on Coinbase, less than $100 above its yearly low. The coin’s $60 billion valuation accounted for around 53.4 percent of the total cryptocurrency market cap.
Featured Image from REUTERS / Michael Dalder. Price Charts from TradingView.
Last modified: May 20, 2020 12:52 PM UTC