How Tech Stocks and Bitcoin ETFs Boosted the US Market Despite Oil and Copper Slump
The US stock market started the week with a strong rally on Monday, thanks to a surge in tech stocks and cryptocurrency prices. The S&P 500 rose 1.4%, the Nasdaq soared 2.2%, and the Dow Jones gained 216 points. The main drivers of this positive momentum were chip makers like Nvidia, which reached a record high, and megacaps such as Amazon, Apple, and Alphabet, which also performed well. However, Boeing faced challenges with an 8% drop in its shares due to problems with the 737 MAX 9 Jets.
Tech Stocks and Megacap Gains
Chip makers were the stars of the show as Nvidia jumped 6.4%, hitting a record high of $522.53. AMD and Intel followed with gains of 5.5% and 3.3%, respectively. Other tech giants, including Amazon, Apple, and Alphabet, each recorded increases above 2.2%, adding significantly to the market’s overall positive performance.
Oil Price Volatility and Geopolitical Tensions
On the other hand, Chevron and Exxon Mobil struggled, with a 0.6% fall and a 1.7% loss, respectively. This was in response to a 4% dive in oil prices, driven by Saudi Arabia’s steep price cuts and an increase in OPEC output. Despite this, the Dow Jones recovered, showing the market’s resilience.
WTI crude futures faced a 5% decline, dropping to around $70 per barrel, erasing gains from the previous week. Saudi Arabia’s price cuts and increased OPEC output outweighed tensions in the Middle East. Geopolitical tensions in the region, particularly the Gaza conflict, continue to be a factor influencing oil prices.
Upcoming Key Events
Investors are now focusing on the eagerly awaited Consumer Price Index (CPI) report scheduled for Thursday. Additionally, the start of the earnings season is set to begin with major financial institutions such as Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo reporting their earnings.
Consumer Credit and Inflation Expectations
Consumer credit in the US saw a significant increase of $23.7 billion in November 2023, exceeding market expectations. Revolving credit, including credit cards, saw a huge rise of $19.1 billion, while non-revolving credit, covering auto and student loans, increased by $4.6 billion.
Inflation expectations for the year ahead fell for the third month in a row in December 2023 to 3%, the lowest level since January 2021. Expectations decreased for food and rent, while the cost of college education saw a slight increase. Earnings growth and spending growth expectations also decreased slightly.
Used Vehicle Market
The Manheim Used Vehicle Value Index for the US showed a modest 0.5% decrease in December 2023, with prices for various vehicle categories experiencing declines. Year-on-year, used car prices were down 7%, with compact cars being the worst performers.
Bitcoin ETF Deadline and Cryptocurrency Market
The cryptocurrency market is in the spotlight as Bitcoin and Ether experience positive gains. Bitcoin leads with a 4.00% increase, while Ether follows closely with a 3.55% rise. This week marks a critical period for Bitcoin, with deadlines looming for the launch of exchange-traded funds (ETFs) backed by the cryptocurrency in the US market.
Copper Futures and Global Economic Indicators
Copper futures extended their retreat to $3.8 in January, reflecting a one-month low. The rebound of the US dollar, uncertain demand, and rising inventories in Chinese warehouses contributed to this decline. Concerns over the Chinese manufacturing PMI and its impact on copper demand added to the market’s uncertainty.
Conclusion
As the market navigates through various factors, including corporate earnings, economic indicators, and geopolitical events, investors are closely monitoring developments in tech, oil, cryptocurrencies, and commodities. The week’s events, including the Bitcoin ETF deadline, could have a significant impact on the market’s direction.