Tame Inflation Isn’t Stopping the Dow from Reaching Record Highs; Bitcoin’s Market Cap Hits $100 Billion

The Dow and broader U.S. stock market surged on Friday after better than expected jobs numbers reassured investors that the economic recovery was still on track. Cryptocurrency prices also broke out of a mundane trading range to reach their highest levels of 2019.

Dow Pops, S&P 500 Follows

Wall Street’s benchmark indexes inched closer to record territory on Friday, with the Dow Jones Industrial Average climbing 196.95 points, or 0.8%, to 26,504.74. Unlike the S&P 500 and Nasdaq, the Dow has yet to reach new peaks in the current bullish cycle.

The broad S&P 500 Index of large-cap stocks rose 1% to close at 2,945.62. All 11 primary sectors finished in positive territory, with consumer discretionary shares leading. A total of six sectors reported gains of 1% or more.

The technology-focused Nasdaq Composite Index surged 1.6% to settle at 8,164.00, a new record high.

Blowout Nonfarm Payrolls Report

Stocks rallied on Friday after the Department of Labor reported an upsurge in hiring last month, reassuring investors that the domestic economy was headed in the right direction. Nonfarm payrolls rose by 263,000 in April following a downwardly revised gain of 189,000 the month before. Analysts in a median forecast had called for a net gain of 180,000.

The official numbers mirrored another blowout jobs report from ADP, which on Wednesday reported a net gain of 275,000 private-sector jobs in April.

Unemployment fell to 3.8% in April, the lowest in nearly five decades. Some of that decline was attributed to a noticeable drop in job-seekers as workforce participation fell to 62.8% from 63% in March.

Signs of tame inflation re-emerged in April as average hourly earnings rose just 0.2%. That translated into a year-over-year gain of 3.2%. Both figures were below the consensus forecast.

Some investors are concerned that weakening inflation is a precursor to a cooling economy, so much so that they think the Federal Reserve will lower interest rates in the next eight months. Those hopes were dashed on Wednesday after Fed Chairman Jerome Powell said there was no need to make any adjustments to monetary policy anytime soon.

Bitcoin’s Meteoric Rise Continues

Bitcoin’s slow grind higher accelerated sharply on Friday after The Wall Street Journal reported that Facebook is developing a new cryptocurrency payment network. Citing sources familiar with the matter, WSJ said Facebook was already in talks with credit card companies to create a new digital token to streamline payments across its vast social media network.

Read more in Hacked.com’s weekly recap: Bitcoin Bulls Eye $6,000 as Momentum Grows, Facebook Seeks $1 Billion for New Cryptocurrency.

Bitcoin peaked north of $5,800, bringing its market capitalization north of $103.5 billion. The leading digital currency was last seen trading around $5,787, having gained more than 5% during the day.

Altcoins and tokens quickly followed suit, with bitcoin cash (BCH) and Litecoin (LTC) among the biggest gainers on the day. Both assets rallied more than 7%. EOS also put up firm gains, rising 6.5% on the day.

The total cryptocurrency market is now worth $185.6 billion and is on track to double off its December low. This is another definitive sign that the so-called ‘crypto winter’ has passed.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

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