- Asset class is experiencing “bubble burst” sentiments similar as bitcoin cryptocurrency
- Concern over inflationary pressures and rising bond yields have hit the stock market this week
- The Dow tumbles down to 666 points, registering a 15% decline since June 2016
- The market scenario has led Wall Street experts to use “bubble” in reference to different asset classes
US stock market suffers the worst day since Brexit
Just yesterday, we reported 15 percent fall in the prices of bitcoin among other cryptocurrencies. Last month had been the steepest in bitcoin’s short history with its prices falling down to below $8,500. South Korea’s step to impose regulations on bitcoin, Arun Jaitley, India’s Finance Minister considering bitcoin illegal along with Facebook’s ban on cryptocurrency ads have been a number of potential reasons for the same.
However, the cryptocurrency market, especially bitcoin is not the only one that is currently going through a negative patch. Today, the down also plunged and closed down on 666 points that have been the worst drop since June 2016.
There has been 2.5% decline in the Dow Jones Industrial Average that is the steepest decline since the financial crisis of 2008 and biggest percentage decline since Brexit in 2016. The job report has shown a solid growth that has raised the concern about inflation and bonds among investors.
The Wall Street is getting increasingly concerned about the scenario surrounding multiple asset classes that have led them to term these assets “bubble”.
Albert Edwards, a Societe Generale strategist is talking about the stock being headed for a reckoning in his research note “Double Bubble Trouble”. Alan Greenspan, who has served as Federal Reserve Chair has similar thoughts being both the asset classes in a bubble.
According to a media source, Jim Paulsen, a chief investment strategist at Leuthold Weeden commented:
“Yields have risen, inflation evidence is rising rather broadly. It’s that combo of factors that are starting to mount. And then you get a report, and that’s the straw that breaks the camel’s back, and that’s kind of what we got into today.”
All the 11 sectors of S&P 500 lowered, energy shares sank down 4.1% and the five-day rout of index reached 3.9%. Nasdaq came down 100 indexes lower and its weekly rout hitting 3.7%. Even Apple Inc. the world’s largest company hit its lowest since October.
New projects and falling USD value possible causes
Market Analysts are calling the clash between Trump administration and the FBI as a major concern. Political turmoil is certainly adding to the market instability. The rising interest rates and the concern that the Fed will further raise these rates are making stocks fall. Also, since November 2016, the stock prices have been rising in quite a straight line and market analysts believe that they are long overdue for a pullback.
The downward trend in the assets classes is one of the steepest in almost two years. This would lead to lack of interest on the investor’s part in the asset class to some extent. It would also bring about the introduction of new and unusual projects such as the healthcare project of Amazon and Warren Buffet. This would certainly spearhead new changes, corrections and better prospects for investors.
The scenario surrounding stock market doesn’t seem much different than the bitcoin. Both have termed “bubble” in their dire states and political along with a steady riding situation calling for a pullback or correction.
What do you think about it all? Let us know your thoughts in our comment section below!