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Cryptocurrencies Trying to Shoulder Out Gold

Goldman Sachs is reportedly ready to clear bitcoin futures trading

By Anthony Mirhaydari, InvestorPlace Market Strategist
iPhone cryptocurrency mining

Source: Shutterstock

U.S. equities drifted higher on Thursday with most of the focus on the parabolic surge in bitcoin, which seemed to rise towards the $20,000-level, although it’s hard to tell for sure. There is no “standard” price and different exchanges are showing various levels. Those in South Korea are carrying the highest prices.

The latest is that Goldman Sachs is reportedly ready to clear bitcoin futures trading when exchanges start trading them later this month. This flies in the face of some pushback by the industry on counter-party concerns given bitcoin’s extreme volatility.

In the end, the Dow Jones Industrial Average gained 0.3%, the S&P 500 gained 0.3%, the Nasdaq Composite gained 0.5% and the Russell 2000 gained 0.8%. Treasury bonds were mostly weaker, the dollar gained, gold lost 1%, and oil rose 1% following a near-3% pullback on Wednesday.

Stocks Drift as Bitcoin Explodes

Breadth was positive with 1.7 advancers for every decliner with volume at 97% of the NYSE’s 30-day average. Industrials led the way with a 0.9% gain while staples were the laggards, down 0.9%.

Shake Shack Inc (NYSE:SHAK) rose 7.9% on an upgrade by analysts at Morgan Stanley in anticipation of increase customer traffic. AK Steel Holding Corporation (NYSE:AKS) rose 3% on an upgrade from JPMorgan on protectionist trade measures.

On the downside, Lending Club Corp (NYSE:LC) lost 10.5% on lowered guidance ahead of an investor day. Yelp Inc (NYSE:YELP) fell 1.5% on a downgrade from Piper Jaffray on user traffic concerns and a movement away from long-form reviews.

Tomorrow will be a critical day in the government funding debate, with the market ignoring the risk of a potential shutdown. Years of volatility compression and short-lived “freakouts” like the Brexit have created a persistent sense of confidence. A possible motivation is the fact the debt ceiling isn’t in play this time around. Separately, there are reports President Trump plans to unveil a $1 trillion infrastructure plan in January.

Friday will also feature the latest update on the health of the labor market, with the November payroll report on deck. This is the last reading before the Federal Reserve policy meeting later this month, where another rate hike is expected. In addition, policymakers will update their economic projections and rate hike assumptions for 2018.

Watch for a more hawkish bent than the market is currently pricing in, which would result in some selling.


Gold is being hammered here, despite indications of incipient inflation on the horizon, in what looks like a reallocation by anti-fiat money types into bitcoin. Gold has been trading in a sideways pattern since the summer of 2013 and continues to struggle to find traction despite years of cheap-money stimulus from global central banks.

Cryptocurrencies are taking the role precious metals once did: As an apparent store of value insulated from the whims of central bank policymakers. However, gold has been seen as a store of value throughout human history. Bitcoin’s rise has been more acute, leaving so-called “altcoins” in the dust, in what looks like a speculative blowoff.

Check out Serge Berger’s Trade of the Day for Dec. 8.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

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Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.

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