A sign is seen at a Bitcoin ATM at a booth during the 2023 Bitcoin Conference in Miami Beach, Florida, United States, May 19, 2023.

Marco Bello | Reuters

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What you need to know today

Leave stocks aside
Bitcoin briefly topped $42,000 on Monday, reaching its highest level in more than a year. The world’s largest cryptocurrency has been buoyed by hopes of approval of a Bitcoin exchange-traded fund and growing bets on U.S. interest rate cuts. Spot gold prices hit $2,100 an ounce, hitting a record high as investors piled into the safe haven.

Wall Street is taking a breath
U.S. stock markets fell on Monday, leaving investors wondering whether markets had risen too fast, too soon, after five straight weeks of gains. The Dow Jones Industrial Average rose slightly by 0.11% at the close. The S&P 500 fell 0.54% and the Nasdaq Composite fell 0.84% ​​due to a selloff in Big Tech stocks. Europe’s Stoxx 600 closed down 0.1%, amid an apparent pause in the recent global rally.

From airlines and DoJ
After Alaska Airlines agreed Sunday to buy rival Hawaiian Airlines in a $1.9 billion deal, many argue that airline executives may now spend many more months convincing regulators to do so that the takeover should be carried out. This comes less than a year after the Justice Department filed suit to block JetBlue Airways’ $3.8 billion cash takeover of budget airline Spirit Airlines.

High costs, major layoffs
Spotify said it is laying off 17% of its workforce, or about 1,500 employees, to cut costs and prepare for a slowdown in growth. Shares of the music streaming service rose more than 7% on Monday. Software provider Twilio also said it would lay off about 5% of its workforce, or about 300 jobs, after underperforming of a unit targeted by activist investors.

[PRO] According to BlackRock, markets are still too early to price in rate cuts

Rick Rieder, head of fixed income at BlackRock, says markets are pricing in rate cuts by the Federal Reserve a little too early and that the central bank should begin making small rate cuts in mid-2024.

The final result

A lot of attention has been paid to the US stock market over the last five weeks, which is exactly how long Wall Street’s weekly winning streak lasted.

Wall Street took a breather Monday after a stunning rally in November as Big Tech stocks that had done much of the heavy lifting fell.

“Digestion is the word of the day,” said Tom Hainlin, senior investment strategist at US Bank Asset Management, describing the sentiment during the session.

But that freed up investors to focus their attention on the new and shiny.

Bitcoin, the largest and arguably most popular cryptocurrency in the world, has staged an incredible rally this year, rising more than 150% since the start of 2023. The digital coin has also surpassed key technical levels, which many analysts see as a sign that the cryptocurrency could rise even further.

Safe-haven gold also caught investors’ attention as its prices hit a new record. There has been steady demand for the yellow metal, which investors often buy during times of geopolitical and economic uncertainty.

The rise in these assets has a lot to do with how soon the Federal Reserve might start cutting interest rates. Stock markets rallied and Treasury yields fell sharply after Federal Reserve Chairman Jerome Powell’s dovish comments on Friday. According to the CME FedWatch tool, markets are currently pricing in about a 60 percent chance of a rate cut starting in March next year.

Even more notable, the decline in Treasury yields has fueled demand for a riskier asset like Bitcoin and the rush for a defensive asset like gold.

Source : www.cnbc.com

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