We are halfway through the trading week and investors are likely crossing their fingers that the weekend comes sooner than usual. That is because it has been a painful few days in the market, with stocks and cryptocurrencies diving into the red. So what all did the stock market do today?
- The S&P 500 closed lower by 0.29%
- The Dow Jones Industrial Average closed lower by 0.48%
- The Nasdaq Composite closed lower by 0.03%
So what did the stock market do today? Here are some of the top stories.
What Did the Stock Market Do Today? Watch the Fed.
Today, the Federal Reserve once again set the stock market in motion as investors raced to process the minutes from its April 27-28 meetings. As a result, stocks rallied from their lows in afternoon trading, although they ultimately still ended the day in the red.
Driving the confidence boost appears to be confidence that the Fed is willing to change its tune. More specifically, the minutes reveal that the Fed is considering trimming its levels of bond-buying activity. Such a decision rests on the current pace of economic recovery, and if it continues smoothly from March.
For investors, that appears to be quite reassuring news. With Covid-19 reopening underway and economic recovery at play, many have been worried about current easy monetary policy. Namely, the fear is that bond-buying and other stimulus measures will force inflation higher than intended, causing pain for consumers. This has also pressured growth-oriented tech stocks in recent weeks.
Now though, Wall Street has a sliver of hope that inflationary fears will be averted. But, as one commentator highlighted, the optimism may be coming a bit too soon. The latest Fed minutes do not include the April jobs miss, which showed Wall Street that the employment situation is far from perfect. If that report shifts how the Fed is thinking about monetary policy, it could mean that a change in action is farther away than the market hopes.
Crypto Influencers Have #DiamondHands
Today was a rough day for Bitcoin (CCC:BTC-USD), as the No. 1 cryptocurrency by market capitalization touched a 24-hour low below $31,000. Regulatory talk in China and the United States compounded ongoing pain. As some analysts put it, Elon Musk backing away from Bitcoin may just be a turning point.
This plunge in BTC simply rocked the entire cryptocurrency market. Unlike in days past, even popular alternatives like Polygon (CCC:MATIC-USD) were not spared, dipping more than 20% on their own. It seems that investors were navigating broader fears about the future of cryptocurrency, especially as exchanges faced outages. Robinhood, Binance, Kraken, Gemini and Coinbase (NASDAQ:COIN) all were struggling to meet consumer demand today.
However, an interesting theme began to merge, and celebrities worked to prove their diamond hands. Musk took a simple approach, simply tweeting that his Tesla (NASDAQ:TSLA) has diamond hands. After investors fretted that the EV giant would sell its Bitcoin holdings, it seems this tweet was enough to assuage fears.
Tesla has 💎 🙌
— Elon Musk (@elonmusk) May 19, 2021
Cathie Wood took it a step further. In a new interview, she shared that she disagreed with the current downward movement of Bitcoin. In fact, Wood said she sees Bitcoin prices racing as high as $500,000, and she thinks now is the time to buy the dip. Combined with Musk’s tweet, it seems the two influencers were enough to at least temporarily calm the cryptocurrency panic.
One other story to watch: Musk’s message took things a step further, inspiring investors to find a diamond crypto. By the end of the day, the two top-trending cryptos on CoinMarketCap were Diamond (CCC:DMD-USD) and DiamondToken (CCC:DIAMOND-USD). It seems even the pain of Wednesday wasn’t enough to shake Musk’s sway in the realm of meme coins.
Container Ships Have a Curious Problem
Each day, the supply chain story becomes a little more complicated.
We already know that there is an ongoing chip shortage, a lumber shortage, a chicken shortage, a boba shortage, a ketchup shortage, a gas shortage, a coffee shortage — predictions are calling for consumers to face a real crunch over the summer when these shortages start to collide and hit them in the pocketbooks.
These shortages are the results of a variety of factors, including Covid-19 disruptions to typical manufacturing patterns. In terms of chips, a key component for automakers and consumer electronics companies, another concern centers around a lack of U.S. investment in R&D.
Regardless of the causes, investors are stuck searching for a solution. And as Tracy Alloway and Joe Weisenthal highlighted for Bloomberg, such a solution is not immediately obvious. In fact, we are just now learning exactly how we ended up in this supply-demand mess.
Want a starting point? Consider how a shipping container shortage is exacerbating the current situation. As the duo discussed, with imports up and U.S. exports down, not enough empty containers were being sent back to China. As a result, a shortage of containers has weighed on imports, forcing shipments to get “rolled” back.
Not sure how to proceed? Consider these seven stocks perfect for benefitting from summer shortages.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.