U.S. stocks opened the year firmly on Wednesday, as fears of a slowing Chinese economy rippled across the financial markets. The major indexes have since recovered the bulk of their declines with the Dow Jones Industrial Average rebounding more than 300 points from the intraday…
U.S. stocks opened the year firmly on Wednesday, as fears of a slowing Chinese economy rippled across the financial markets. The major indexes have since recovered the bulk of their declines with the Dow Jones Industrial Average rebounding more than 300 points from the intraday low. Cryptocurrencies were largely immune from the chaos in traditional markets, as capital poured back into the ecosystem following a brief holiday lull.
Wall Street’s major indexes declined sharply after the opening bell, with the Dow Jones Industrial Average losing as much as 400 points. The blue-chip index has since pared most of its decline and is currently down 64 points, or 0.27%, from its previous close.
The large-cap S&P 500 and Nasdaq Composite Index were each down more than 1.1% earlier in the session. The S&P 500 has since pared its loss back to 0.6%. The Nasdaq is down only 0.1% from Monday’s close.
Stocks staged a large recovery last week but still rounded out their worst month of trading since the financial crisis. This included brief stints in bear-market territory for the Nasdaq and S&P 500.
Fears of a protracted slowdown in China’s economy has been a major focal point for investors amid ongoing trade negotiations between Washington and Beijing. China’s manufacturing sector, once a stalwart of domestic growth, contracted in December for the first time since 2016.
The government’s official manufacturing purchasing managers index unexpectedly dropped to 49.4 in December from 50.0 in November, the National Bureau of Statistics reported Monday. A PMI reading below 50.0 signals contraction in economic output.
Meanwhile, on Wednesday, the privately-compiled Caixin manufacturing index showed a sharp drop in new orders last month.
Several misfires by the People’s Bank of China (PBOC) have pushed real estate and government bond prices into bubble territory while failing to achieve the desired goal of boosting lending. This means a further cooldown in domestic growth is likely over the next several quarters.
Volatility in traditional markets has little bearing on cryptocurrencies, as evidenced by the broad uptick in price action on Wednesday. Trading on virtual currency exchanges rose 16% midweek, as capital poured back into the market following a quiet New Year session.
Crypto markets have added $6 billion in combined value overnight to reach $132.2 billion.
Bitcoin rose 3.5% to $3,879.88. The leading digital currency briefly traded above $4,000 on Wednesday, according to CCN’s bitcoin price chart.
Ethereum regained its position ahead of XRP as second-largest cryptocurrency by market cap following a double-digit surge through the early morning session. Ether is currently valued at $151.83, having gained 11.9%. XRP was up 3.5% at $0.3671. In terms of market cap, ether was valued at $15.8 billion compared with $15 billion for XRP. Read more about the so-called “flippening”: Ethereum Flips XRP for Second Spot in Crypto Market Ranking Following 12% Gain.
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Last modified: May 20, 2020 1:02 PM UTC