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Market Response to Rate Cut Speculation

At the start of the week, the stock market was shaky, with the S&P 500 and Nasdaq Composite opening lower than the previous week’s close on Monday, August 19. However, both indices secured their eighth consecutive day of gains, alongside the S&P/TSX Composite Index. The Russell 2000 Index saw a 1.1 percent increase on the same day.

On Tuesday, August 20, amidst cautious trading, major indexes remained relatively stable as investors awaited fresh inflation data. Wednesday, August 21, brought U.S. non-farm payroll benchmark revisions and minutes from the Federal Reserve’s July meeting. The Bureau of Labor Statistics reported lower job growth between March 2023 and March 2024 than previously estimated, despite an expanding labor market.

Following the Fed meeting minutes, which revealed considerations for a rate cut due to reduced inflation and increased unemployment, confidence in a rate reduction grew for September. This news drove market indexes upwards, with the Russell 2000 leading with a gain of over 1 percentage point, closing at 2,170.32.

Continued Market Momentum

Thursday, August 22, saw the upward trend persist, with most indices opening above the previous day’s close, except for the S&P/TSX Composite. Economic data indicated a drop in the U.S. manufacturing PMI to 48 in August from 49.6 in July, falling below expectations. In contrast, initial jobless claims rose slightly in the week ending on August 17, increasing by 4,000 to 232,000 from the previous week.

Chart via Google Finance.

NVIDIA performance, August 19 to August 23, 2024.

Market News: Stocks experienced a midday retreat on Thursday, led by the

Market Movement Recap: NVIDIA, Bitcoin, and Democratic Stance on Crypto

1: NVIDIA Shares React to Powell’s Speech in Jackson Hole

After a 4.77 percent drop, NVIDIA (NASDAQ:NVDA) experienced a resurgence in share price following Federal Reserve Chair Powell’s address at the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming. Powell hinted at an imminent rate cut, providing hope for investors. This positive sentiment led to a surge in all major stock indexes, with the Russell 2000 showing remarkable performance, reinforcing investor interest in mid-cap stocks—an ongoing trend in response to optimistic Fed data.

By the end of the week, all four major indexes, including the Russell 2000, closed more than 1 percent up, with the latter showing an impressive 3 percent gain.

2: Bitcoin Price Rollercoaster Breaks Through US$60,000

Bitcoin’s market value experienced fluctuations last week, starting with a dip below US$58,000 before exceeding US$61,000. A sharp pullback coincided with a dip in US stock indexes midweek, while volatility continued through to the end of the week. Despite recent data indicating a slight decrease in demand for Bitcoin, the number of institutional investors holding Bitcoin ETFs saw a significant 14 percent increase in Q2 compared to Q1.

Analysts hint at a possible downturn based on market indicators, with the 14 month stochastic indicator suggesting an overbought condition. However, positive economic news on Friday pushed Bitcoin prices above US$64,000 by the evening, with Ether also gaining momentum, trading above US$2,770.

3: Democratic Stance on Crypto Excludes Clear Position From Harris

The Democratic Party’s 2024 Platform, unveiled before the Democratic National Convention, omitted Vice President Kamala Harris’s stance on cryptocurrency and web3 infrastructure. While speculation within the crypto community hints at potential support from Harris for the industry, her official position remains undisclosed, particularly regarding the regulation and taxation of decentralized finance.

Although the platform mentions “Biden’s second term,” it remains uncertain how Harris’s stance will influence the party’s approach to the crypto sector moving forward.