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09 Sep 2021
2 min read

US Stocks Slide as Nasdaq Ends Record Run, Bitcoin Steadies

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Key Takeaways

  • Stocks in the US decline on lack of optimism, Nasdaq slips from record high
  • Investors expect the ECB meeting today to provide insights into the central bank’s tapering plans

Stocks Slip From Record High

Equities on Wall Street dropped on Wednesday as market participants elevated their concerns that the Covid-19 pandemic could dent the economic recovery. The expected reversal of the Federal Reserve’s monetary policy helped pressure the valuations of stocks across the board.

The blue-chip Dow Jones Industrial Average declined 68.93 points, or 0.20%, to finish the session at 35,031.07. The S&P500 fell moderately by 5.96 points, or 0.13%, to 4,514.07.

The Nasdaq Composite ended a four-day winning stretch as large technology companies weighed to the downside. The tech-heavy index declined 87.69 points, or 0.57%, to settle at 15,286.64. The benchmark index reached its all-time high a day earlier.

Traders and investors have been increasingly concerned in recent days over the outlook for the economy and the prospects for growth. The elevated wariness has been transferred into a dragging market as money managers are struggling to figure out the implications of a renewed Delta wave coupled with weaker economic reports and potential tapering from the US central bank.

Inflationary pressures are also involved in the mix of uncertainties. Globally, prices are rising while central bankers argue that the surge in inflation is only temporary and higher price levels will fade once economies reopen to a greater extent.

Consumers Spend Less as Covid-19 Cases Increase

In signs of a slowdown in the US economy, the Federal Reserve said on Wednesday the resurgence of Covid-19 across the states has prompted consumers to scale down their spending.

The Fed’s Beige Book, a report by the US Federal Reserve on economic and business conditions, showed the growth of the US economy “downshifted slightly” over the last few months. “The deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant,” the report said.

As the third quarter is coming to an end in three weeks, investors are uncertain whether the same pace of gains could be carried into the last three months of the year. So far in 2021, the broad-based S&P500 has returned more than 20% without a single 5% drawdown.

Over to cryptocurrency, the price of bitcoin steadied on Wednesday and remains slightly positive in the early hours of Thursday’s session. The original token finished yesterday’s session in the red, near the flatline at $46,300 per coin.

A day earlier, the price of bitcoin plunged 17% in a flash crash that erased over $400bn of the entire market’s value.

In Europe, stocks on Thursday remain pressured following a disappointing market action on Wednesday. The pan-continental Stoxx 600 lost 5 points yesterday, or 1.1%, while major European bourses finished in the red, lower between 0.6% and 1.5%.

Market participants on both sides of the Atlantic are monitoring the latest moves by both the Federal Reserve and the European Central Bank.

On Thursday, the ECB will announce its interest rate decision in a press conference by ECB President Christine Lagarde. Additionally, traders will be expecting to hear insights into the ECB’s plans to start tapering monetary policy.

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