Dow, S&P 500, Nasdaq Drop; Fed Rate Decision Influences Bitcoin, Silver, Stocks
Stocks began December with declines after a five-day winning streak. The S&P 500 fell by 0.5%, while the Dow Jones Industrial Average dropped 0.9%. The Nasdaq Composite also saw a decrease of 0.4%. Notably, losses were driven by the utility sector, typically regarded as one of the more stable areas within the market.
The downturn in stocks coincided with a rough start for bonds. The iShares 20+ Year Treasury Bond ETF experienced a decline of 1.6%. This downturn may be associated with a significant sell-off in the Japanese bond market, where long-term yields reached a 17-year high. Since yields and prices move inversely, this surge in yields could be impacting investor sentiment across various asset classes.
Impact on Bitcoin and Stocks
Bitcoin faced notable volatility, trading as low as $83,840 after peaking above $120,000 in October. This sharp decline reflects broader concerns about risk in global assets, including cryptocurrencies. Jason Williams, a strategist at Citi, characterized the situation as a “perfect storm,” attributing the market fluctuations to both global movements and supply-side pressures.
Market Outlook and Historical Context
Analysts express mixed views regarding the month ahead. Jonathan Krinsky, Chief Market Strategist at BTIG, indicated that recent bullish trends leading into Thanksgiving created conditions for a potential “post-Thanksgiving hangover.” He cautioned that while December may ultimately end positively, it is likely to be marked by significant volatility.
Historically, December has been a favorable month for the Dow. According to SentimenTrader, there is a 74.2% probability of achieving a gain in post-election Decembers, meaning that historically, only about one in four of these years has ended in a loss. Jay Kaeppel, a senior research analyst, noted that historical trends suggest a bullish outlook for stocks during this month.
Monthly Performance Data
- Average gain for the Dow in December over the last century: 1.46%
- Probability of a gain in post-election December: 74.2%
In summary, as December unfolds, cautious sentiment prevails in both the stock and cryptocurrency markets. Investors are keenly watching developments, especially in light of recent trends and historical data suggesting December can still prove beneficial for stock performance.
