Wall Street was hit Monday morning by further declines in the U.S. stock indices, adding to losses last week. Reports indicate that investors are concerned about the upcoming Federal Reserve rate hikes and China’s recent Covid-19 outbreak. On Monday, equities fell below the $2 trillion mark as the crypto economy and gold prices plunged 1.6% against US dollars during the last 24 hours. Following Elon Musk’s announcement that he bought Twitter at 2:50 (ET), both crypto and equities rebounded tremendously.
The Fears of Covid-19 Supply Chain Problems in Global Markets, and Aggressive Rate Hikes Possible
Four days ago, Jerome Powell, the current U.S. Federal Reserve chair, explained at an International Monetary Fund (IMF) panel discussion on April 21, that the U.S. central bank may have to move “more quickly” when it comes to bank rate hikes. Powell also noted that the U.S. central banks could increase the rate by 50 basis points at their next Fed meeting. Investors were scared by Powell’s hawkish remarks and U.S. stockindices suffered losses just before last weekend.
On Monday, Wall Street continued to suffer as the Dow Jones Industrial Average, NYSE Composite, and the S&P 500 all saw losses. After losing 415.23 Points at 10:00 ET, the Dow fell by just under half its losses. It recovered slightly more than half of those lost points in the afternoon. The blame is currently being placed on the Federal Reserve’s upcoming rate hikes, and China’s Covid-19 lockdowns. The chief equity strategist at MAI Capital Management, Christopher Grisanti, told Reuters that China’s current lockdowns have caused fear of possible supply chain problems.
“China lockdowns are getting worse. It slows general economic growth and also creates supply chain issues that will continue to make inflation bad and lower earnings growth in the United States,” Grisanti said. “I don’t think we’ve seen the bottom yet. We haven’t had that big sell-off yet where we have huge volumes,” the strategist added.
Gold and Crypto Markets Suffer, Portfolio Manager Says ‘Markets Are Struggling’
Recent trends have been downward for cryptocurrencies as well as gold. In the week that has passed, the cryptocurrency economy saw billions disappear and is now below $2 trillion. Many of the top 10 digital assets suffered losses between 2-10% over the past seven days. In the 24 hour period, there have been some losses in the value of 1 ounces of gold.
Over the last 24 hours, one ounce fine gold and one ounce silver have lost 1.6% each. Gold prices over the last 30 days have been stagnant too, and one-month stats show an ounce of gold’s USD value increased by a slight 0.39%. In contrast, silver dropped by more than 3 percent in the past 30 days. The precious metals’ decline in value is also being blamed on China’s Covid-19 outbreak and current U.S. Treasury yields could be pulling gold investors away.
Steven Violin, a portfolio manager at F.L.Putnam Investment Management Co. told Marketwatch in an interview on April 23, that investors are struggling with “very strong forces.” Violin remarked that it’s very likely that nobody can predict what’s going to happen with the economy. “The tremendous economic momentum from the recovery from the pandemic is being met with a very rapid shift in monetary policy,” Violin said. “Markets are struggling, as we all are, to understand how that’s going to play out. I’m not sure anyone really knows the answer.”
U.S. Equities and Cryptocurrencies Erase the Day’s Losses After Musk Buys Twitter
Despite the stock market downturn and the recent crypto economy losses, both equities and crypto prices rebounded after Twitter announced that Tesla’s Elon Musk purchased Twitter. After the announcement, $1.93 trillion was added to crypto’s total value. BTC soared above $40K after falling below that mark.
It is important that I am not criticized by anyone on Twitter. That’s the essence of free speech.
— Elon Musk (@elonmusk) April 25, 2022
Major U.S. stock indexes recovered from the morning losses as well as NYSE, the Dow, S&P 500, and Nasdaq erased much of the day’s losses. Major indexes went from green to red as Wall Street closes for trading. After the company was acquired by Musk, Twitter’s current CEO Parag Agrawal said: “Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important.” It seems stock investors and crypto market participants like the fact that Musk purchased the social media firm.
Do you have any thoughts on the current state of global markets? Are you expecting markets to slide further or are you optimistic that they will rebound in the future? Comment below to let us know your thoughts on this topic and the economy.
Image creditShutterstock. Pixabay. Wiki Commons
DisclaimerThis article serves informational purposes. This article is not intended to be a solicitation or offer to sell or buy any product, service, or company. Bitcoin.com doesn’t offer investment, tax or legal advice. This article does not contain any information, products, or advice that can be used to cause or alleged result in any kind of damage.
