Good morning and welcome to the stock market today! Big banks remain in the spotlight thanks to the IPO boom and the Archegos Capital fallout. Dogecoin (CCC:DOGE-USD) is absolutely skyrocketing, with DOGE prices hitting new highs on Friday. With so much going on today on Wall Street, what will the stock market do today?
To start, the major indices are split on Friday. The S&P 500 is up 0.24% and the Dow Jones Industrial Average is up 0.45%. The Nasdaq Composite is not so fortunate, with the tech-heavy index down 0.13% at the time of writing.
So what else will the stock market do today? Check out the top three stories.
What Will the Stock Market Do Today? Talk Crypto Bans.
Bitcoin (CCC:BTC-USD) and Dogecoin are the talk of Wall Street right now, with Dogecoin price predictions skyrocketing. In fact, the meme coin has soared past the 40-cent mark on Friday morning, a feat previously thought impossible by many.
However, there is one big downside catalyst already flexing on Bitcoin.
Governments around the world are not so sure about the digital currency, especially as it challenges a cherished power to issue money. On Friday, BTC prices are falling, following a decision by the central bank of Turkey to prevent any blockchain-based transactions. Turkey says that Bitcoin and other cryptocurrencies pose too many risks to users. One reason for the concern is that the central bank believes there is not adequate regulation on the cryptocurrency market. This decision comes at a time when the crypto market was just starting to boom in Turkey.
What does this mean for investors? Turkey is not the first country to make such a move, with a handful of other countries banning residents from transacting with digital currencies. In recent weeks, news that regulators in India were proposing a cryptocurrency ban also rocked the market. Even high-profile investors and regulators in the U.S. have taken jabs at cryptos and other investments popular with the retail crowd.
It seems that as cryptocurrencies continue to grow in mainstream support, they also grow in mainstream scrutiny. Expect this headwind to continue as investors navigate the challenges that come with increased visibility on digital currencies.
Lumber Prices Hit an All-Time High
Lurking beneath the surface of the cryptocurrency craze, lumber futures hit an all-time high on Thursday. According to the Chicago Mercantile Exchange data, lumber futures hit $1,260 per thousand board feet. That represents year-over-year gains of more than 250% from April 2020 prices of $358.
As the team at Morning Brew writes, there are a few factors behind this surge. Covid-19 created a supply-demand imbalance that has majorly hit lumber supply. In a similar situation to the chip shortage, many mills closed at the beginning of the pandemic. When they reopened, demand was much higher than expected, and the mills are now racing to keep up. Also hurting things is a labor shortage and a plague of mountain beetles spreading through forests.
Many investors already know that there is chaos in the housing market. We have reported on the sky-high demand for new listings, and the roles that large buyers are playing in the frenzy. Experts are worried about housing affordability and challenges on homebuilders.
So what should you do right now? Although not everyone agrees, many experts are recommending that investors dive into housing stocks right now. Top names include PennyMac Financial Services (NYSE:PFSI), Howard Hughes (NYSE:HHC), D.R. Horton (NYSE:DHI) and Lennar (NYSE:LEN).
Gold Is Feeling a Little Jealous
Have you forgotten about gold? It seems the precious metal is getting a little jealous of the wild swings in the cryptocurrency space.
On Thursday, gold rallied to a new one-month high, with spot prices climbing 1.8% to $1,766.50 an ounce. Silver, platinum and palladium were also once the rise, nearing monthly highs of their own. The impressive rallies on Thursday came as U.S. Treasury note yields and the dollar slumped, and as inflation fears stood in the spotlight.
According to Wall Street, gold is worth a close look right now. In fact, as Circle Squared Alternative Investments founder Jeffrey Sica told CNBC, as investors anticipate massive inflation thanks to Covid-19 stimulus spending, gold is the best way forward.
However, those bullish words are not preventing a bit of sparring in the market. As Neils Christensen wrote for Kitco, the record rally in Bitcoin is weighing down gold. Investors likely know a bull case for Bitcoin is that it is a hedge against inflation and other apocalyptic fears. That puts it in competition with the precious metal. Christen cites analysts from CrossBorder Capital, who say that liquidity is now being spread out between gold and Bitcoin. Those analysts think Bitcoin has reduced the fair value of gold by as much as $158 per ounce.
So what does this mean going forward? CrossBorder Capital is bullish on gold despite the impact of Bitcoin. Analysts at the firm actually see a silver lining — a case for the two assets to work together to generate gains for investors. CrossBorder recommends that investors hold both Bitcoin and gold, because together, they could be the most prudent hedge against inflation.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.