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08 Sep 2021
2 min read

Stocks Wobble After Labor-Day Weekend, Bitcoin Tanks $9,000

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Key Takeaways

  • Stocks on Wall Street finished mostly lower as investors brace for uncertainty
  • Bitcoin drops as much as 17% on the day El Salvador rolls out bitcoin as the national currency

Stocks Slip After Labor Day Weekend

US stocks ended Tuesday’s trading mixed after investors returned from a three-day Labor Day weekend. Bitcoin and the entire cryptocurrency market endured a flash crash that wiped more than $400bn in a few hours on the day of El Salvador’s official rollout of bitcoin as its legal tender.

Stocks across the board finished mostly lower with the S&P500 declining 15.40 points, or 0.34%, to close at 4,520.03. The Dow Jones Industrial Average lost 269.09 points, or 0.76%, to end the session at 35,100.00.

The Nasdaq Composite gained modestly to log its fourth straight day in the green. The tech-centered stock gauge added 10.81 points, or 0.07%, to settle at 15,374.33.

Traders and investors on Tuesday decreased their risk appetite as recent economic data suggests an economic slowdown is emerging. As the colder months of the year kick in, consumer spending has slightly retreated and employers are wary of hiring in-person staff due to potential lockdown measures amid the sustained spread of Covid-19.

The swift economic rebound has been through several setbacks with the latest non-farm payrolls report as the most notable example to highlight slowing growth. The August jobs data indicated hiring pulled back significantly as US employers added 235,000, undershooting estimates for more than 700,000.

Analysts blamed the sharp upside swing in coronavirus cases across the states for the weaker-than-expected jobs number. A continued rise in daily infections has seen the US report an average of at least 150,000 per day since August 20.

Behind the Crypto Market Flash Crash

Concerning data from the New York Times showed daily Covid-19 infections in the US spiked to a new all-time high yesterday. According to the statistics, as much as 300,885 new cases were reported on Tuesday, surpassing the previous peak on January 7 when health authorities reported 300,777 infected people.

Climbing cases could further dampen recovery expectations as traders are already positioning their portfolios to reflect some form of restrictions to curb the virus threat.

Meanwhile, in cryptocurrency, bitcoin briefly nosedived more than 17% on Tuesday, the same day El Salvador launched bitcoin as its legal tender. The crypto flash crash erased nearly $9,000 from bitcoin’s price. Ether suffered a staggering loss of almost 25%, while dogecoin plunged 30%.

One reason cited as a potential catalyst for the double-digit losses across the crypto board was El Salvador’s failure to launch its bitcoin e-wallet. The government had to temporarily disconnect the platform to fix technical glitches that prevented people from using the service.

Nevertheless, the small Latin American country of 6.5 million people became the first to adopt bitcoin for nationwide use as legal tender. Salvadorans would now be able to pay with bitcoin for their coffee, gas, or any other expense.

In European market action on Tuesday, investors were largely in defense mode. The region-wide Stoxx 600 dropped half a percent to settle at 472.87. Major European indexes declined between 0.3% and 0.7%. Spain’s IBEX35 was the only stock gauge flashing green.

US futures early on Wednesday hover right at the flat line ahead of the opening bell today.

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