Markets
A warning of an “imminent” stock market “correction” suddenly turned red, just as the S&P 500, Nasdaq and Dow hit record highs
Stock markets are surging after Federal Reserve Chairman Jerome Powell fanned the flames of interest rate cut hopes in September.just after issuing a “critical” warning.
The S&P 500 and Nasdaq hit new all-time highs, following in the footsteps of the Dow, which peaked in May, despite fears of a new debt spiral that are unsettling traders.
NOW, as uncertainty hangs over the White HouseOne analyst pointed out that a surprise stock warning like this just started flashing red.
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Federal Reserve Chairman Jerome Powell has helped push stock markets higher, with the S&P 500, the… [+] Nasdaq and Dow hit new all-time highs.
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The recent crash in bitcoin and cryptocurrencies, which saw $500 billion wiped out of the combined market in just over a month, could be about to trigger “an imminent summer correction in the S&P 500,” said Barry Bannister, managing director and chief equity strategist at Stifel. said Market surveillance.
Bannister highlighted bitcoin’s correlation with stock markets, particularly the tech-heavy Nasdaq, in recent years.
“It’s the availability of cheap liquidity from the Fed that’s driving the price of bitcoin,” Bannister said. “Every dovish pivot over the last 13 years has been a big rally in bitcoin, and bitcoin is a non-interest-bearing asset that thrives on lower interest rates and available liquidity” — much like stock markets.
In his second day of testimony before Congress this week, Fed Chairman Powell said he has “some confidence” that inflation is coming down, but is not ready to declare war on inflation.
“Bitcoin has been a good leading indicator for the Nasdaq-100 over the years,” Jonathan Krinsky, chief market technician at BTIG, wrote in a note ahead of the S&P 500, Nasdaq and Dow rally this week.
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The price of bitcoin has fallen sharply in recent weeks, fueling fears that stock markets will follow… [+] down, even as the S&P 500, Nasdaq and Dow hit record highs.
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For now, the momentum is on the side of stocks, as traders continue to bet on interest rate cuts from the Federal Reserve.
“Growing confidence in U.S. rate cuts has kept the mood upbeat and broad-based gains going,” Dan Coatsworth, investment analyst at brokerage AJ Bell, said in emailed comments.