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Key Takeaways:
- President Biden reappoints Jerome Powell as Fed chief for another four years
- Stocks and cryptos slump on Friday after Covid-19 fears return to the markets
Joe Biden Reappoints Jerome Powell as Fed chief
It was a volatile week for the financial markets even though US traders took a break for Thanksgiving Day on Thursday. Still, major asset classes experienced renewed jitters as participants digested all that happened.
Monday’s market action began on a relatively quiet note. At least for the first few hours of the session. Then, US President Joe Biden said he nominates Jerome Powell to lead the Federal Reserve for four more years. To this end, Mr. Powell’s second term as Fed Chairman was greeted by investor optimism. As a result, major indexes in the US gained early Monday. Later, however, buying momentum faded and the main stock gauges finished the day mixed.
Federal Reserve Open to Quicker Taper
Staying on the Federal Reserve theme, on Wednesday, the US central bank released its minutes from its last meeting on Nov. 2-3. In the meeting summary, Fed officials signal they are open to withdrawing the monetary stimulus at a faster pace. The step is considered as a way to reign in higher consumer prices.
“Some participants suggested that reducing the pace of net asset purchases by more than $15 billion each month could be warranted,” the minutes say.
On the economic front this week, US jobless claims reached a 52-year low as the US labor market continues to recover. In more detail, first-time filings for unemployment benefits for the past week dropped to 199,000. This was the lowest level seen since November 15, 1969.
Tesla Stock Jitters Continue as Elon Musk Keeps Selling
In individual stocks, Tesla shares maintained their choppy performance as Elon Musk continued to sell his holdings. So far, the billionaire chief executive has sold about $10 billion worth of stock. In order to meet his 10% goal, promised on Twitter, he should cash in roughly $10 billion more.
In the meantime, investment bank JPMorgan stepped up efforts to sue Tesla for $162 million over trade the bank helped arrange in 2014. Elon Musk’s response: “If JPM doesn’t withdraw their lawsuit, I will give them a one-star review on Yelp,” he told the WSJ. “This is my final warning!”
The global financial markets experienced renewed jitters during the week as investors scrambled to position their portfolios. Among other uncertainties, inflation pressures weighed on US stocks, but investors pressed forward. As a result, the S&P500 and the Nasdaq Composite posted new all-time records.
In Europe, on the other hand, stocks performed remarkably well as they also set record highs amid positive earnings reports. In more detail, the pan-European Stoxx Europe 600 gained earlier in the week, reaching an all-time high near 490.00.
Still, on both sides of the Atlantic, investors increased their concerns that inflation will most likely remain. The expected new reality is in contrast to what central banks around the world have predicted. More precisely, the US Federal Reserve, and the European Central Bank, projected inflation will gradually ease as the economic reopening unfolded.
Stocks Tumble Friday as Covid-19 Returns
In that context, stocks on Wall Street swung between gains and losses before Friday came and wrecked the financial markets. A new variant of the Covid-19, first spotted in South Africa, threatened to roll back economic progress around the globe. Initial reports claimed the virus could probably evade vaccines and was quick to spread.
As a result, fear swept the financial markets and knocked major indexes and individual stocks on Friday.
Bitcoin Moves Sideways as Market Expects Fresh News
Heading over to cryptocurrency markets, bitcoin’s price remained pinned near $57,000 throughout the week as traders awaited fresh news. On this note, crypto traders used the calm market environment to accumulate more of their favorite tokens.
On Friday, however, digital assets were not spared by the heavy selling pressure going on in the wider markets. To this end, bitcoin slipped under $55,000 per coin, while Ether dropped below $4,000 apiece.
Nevertheless, several major events highlighted the week for cryptocurrencies. First, El Salvador’s Bitcoin-friendly President Nayib Bukele announced the creation of Bitcoin City. More precisely, the city will be tax-free and will host a giant Bitcoin symbol in its center. It will also be shaped in the form of a circle to resemble a coin.
Second, Morgan Stanley filings with the Securities and Exchange Commission showed the bank held bitcoin products in the third quarter. Specifically, the Wall Street mainstay had exposure to bitcoin through several of its funds. The Growth Portfolio Fund, for example, held 1.5 million shares of the Grayscale Bitcoin Trust (GBTC).
The step highlights growing crypto adoption among Wall Street banks. It also showed demand for cryptocurrency among mainstream finance is quickly accelerating as sentiment toward cryptos improves.