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Nasdaq rallies on Monday afternoon to snap losing streak, erasing loss of more than 2%

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U.S. stocks staged an afternoon rally on Monday as major tech stocks reversed earlier losses, helping the Nasdaq Composite snap a four-day losing streak.

The Nasdaq closed with a gain of 0.05% at 14,942.83 after falling more than 2% earlier in the day. The S&P 500 closed down 0.14% at 4,670.29 and the Dow Jones Industrial Average finished with a loss of 162.79 points, or 0.45%, at 36,068.87, also well off session lows.

Large-cap tech stocks were under pressure in early trading but were able to stabilize and then move higher as the day wore on. Nvidia, Tesla and Apple all closed higher after losing ground earlier in the session.

The rough start to the year for stocks has come as interest rates have spiked. The benchmark 10-year Treasury yield briefly traded above 1.8% on Monday morning after ending 2021 near 1.51%, but settled back below that level later in the day. On Sunday, Goldman Sachs projected the Federal Reserve will hike rates four times in 2022, signaling that Wall Street increasingly expects the central bank aggressively attempt to curb inflation.

However, the market appeared to be nearing key technical levels on Monday. At its lowest point, the Nasdaq was more than 9% below its record closing high from November, putting it on the verge of a correction. JPMorgan strategist Marko Kolanovic said in a midday note that investors should buy the dip in stocks.

Shannon Saccocia, CIO of Boston Private Wealth, said on CNBC’s “Closing Bell” that the economy should be able to handle a further rise in interest rates.

“Buying the dip in some of these high valuation growth stocks, not necessarily what I’d do today. But I do think from an economic standpoint we are looking at continued growth over the next several quarters … so there’s a lot of positives here that offset some of what’s happening in the interest rate environment,” Saccocia said.

JPMorgan CEO Jamie Dimon struck an optimistic tone on Monday, telling CNBC that he expected strong growth this year even though he saw the Fed raising rates more than four times over the course of the year.

“We’re going to have the best growth we’ve ever had this year, I think, since maybe sometime after the Great Depression,” Dimon told CNBC’s Bertha Coombs during the 40th Annual J.P. Morgan Healthcare Conference.

“The market can have its own fluctuations unrelated to the economy, and I think you need this kind of growth to justify the market. We’re kind of expecting that the volatility will have a lot of volatility this year as rates go up,” Dimon added.

Even with Monday’s upturn, stocks are still down sharply for the year. The S&P 500 has fallen for five consecutive days and is down 2% since the start of January. The Nasdaq is down more than 4% year to date.

Elsewhere, shares of video game publisher Take-Two fell more than 13% after the company announced a deal to purchase Zynga. Retail stocks Nike and Tapestry fell 4.2% and 4.7%, respectively. Lululemon fell nearly 2% after the company said the omicron variant had hurt its fourth-quarter results.

Monday’s moves came ahead of a busy week of economic data and central bank news. Fed Chairman Jerome Powell is scheduled to testify Tuesday at his nomination hearing before a Senate panel, while the hearing on Fed Governor Lael Brainard’s nomination to the post of vice chair is set for Thursday. While both are expected to be confirmed, the hearings could provide key information about the future of monetary policy.

The consumer price index is set for release Wednesday and is expected to show a year-over-year increase of 7.1%, according to Dow Jones estimates. The producer price index, which measures wholesale prices, is slated for Thursday.

Earnings season also begins this week, with financial heavyweights JPMorgan Chase, Citigroup and Wells Fargo release quarterly results Friday.

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BUSINESS

5G Deployment: Nigeria approves Microsoft’s agreement, migration of C-Band services

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The federal government has approved an Enterprise Licensing Agreement for Microsoft products and the clearing up of C-Band Spectrum in order to accelerate the deployment of 5G services in the country.

In a statement, the Ministry of Communications and Digital Economy, on Thursday, said the approval was given during the meeting of the Federal Executive Council (FEC) last Wednesday.

This agreement is part of the federal government’s effort towards keeping the cost of IT projects within sustainable levels, the statement, signed by the Technical Assistant to Pantami, Dr Femi Adeluyi, revealed.

He said the agreement would give the government access to discounted prices and other cost benefits, as well as reduce project duplication across Federal Public Institutions (FPIs).

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Bitcoin posts its worst quarter in more than a decade

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Bitcoin on Thursday posted its worst quarterly loss in more than a decade.

The world’s largest cryptocurrency has lost around 58% of its value in the second quarter of 2022, according to data from CryptoCompare. Bitcoin has fallen from $45,524 at the start of the quarter and was trading just below $19,000 on Thursday, the last day of the three-month period.

This is the worst quarterly performance for bitcoin since the third quarter of 2011 when it lost 68.2% of its value.

Bitcoin is down 39.8% in June and is on pace for the worst month ever dating back to 2010 when it became available on exchanges, Coin Metrics data shows.

Meanwhile, ether is down 69.3% in the second quarter and is on track for its worst quarter on record, dating back to its inception in 2015, according to Coin Metrics data.

Coin collapse, 3AC liquidation
Cryptocurrency prices have come under intense pressure this quarter amid rampant inflation which has caused central banks around the world to raise interest rates and led to a sell-off in risk assets, such as stocks and digital coins.

The crash in prices has also exposed issues with a several cryptocurrency companies and projects, particularly those in the lending space and firms that are highly leveraged.

A number of high profile issues have come to light during the quarter.

In May, the algorithmic stablecoin terraUSD collapsed along with its sister token luna. A stablecoin is a digital currency pegged to a real-world asset. TerraUSD was supposed to be pegged one-to-one with the U.S. dollar. Some stablecoins such as tether are backed by real assets like fiat currencies and government bonds. But terraUSD was governed by an algorithm which effectively failed.

Then In June, crypto lending firm Celsius paused withdrawals for its customers citing “extreme market conditions.”

Meanwhile, cryptocurrency exchange CoinFlex halted withdrawals for customers last week also citing “extreme market conditions.” But the company also claimed long-time crypto investor Roger Ver owes it $47 million after his account went into “negative equity.” Ver has denied that he owes CoinFlex money.

And the liquidity crisis has also hit prominent crypto hedge fund Three Arrows Capital which has fallen into liquidation, CNBC reported on Wednesday.

The latest downturn is being described as a new “crypto winter” and has also impacted growth and hiring at companies. Coinbase and BlockFi announced plans to lay off staff.

How does this cycle compare to the past?
Jacob Joseph, research analyst at CryptoCompare, notes that in the previous boom and bust cycle, bitcoin fell from a peak of $19,871 in the fourth quarter of 2017 to a low of $3,170 in the fourth quarter of 2018, suffering a drawdown of 8%.

Joseph said a similar fall of 82.2% was seen in 2014 when bitcoin fell from a high of $1,239 in the fourth quarter of 2013 to a low of $221 in the second quarter of 2015.

“This suggests that we could be in for a further drawdown period if the current poor macroeconomic conditions continue to persist,” Joseph told CNBC.

Other investors have expressed bearishness. In May, Guggenheim Chief Investment Officer Scott Minerd, said bitcoin could drop to $8,000. At the time, the cryptocurrency was trading at around $30,000, representing a 70% fall.

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European markets set to retreat as caution persists after worst quarter since 2020

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European markets are set to pull back on Friday after suffering their worst quarter since the onset of the Covid-19 pandemic, as inflation and interest rate hikes continue to weigh on sentiment.

Britain’s FTSE 100 is seen around 38 points lower at 7,131, Germany’s DAX is set to fall by around 123 points to 12,661 and France’s CAC 40 is expected to drop by around 54 points to 5,869.

The pan-European Stoxx 600 index closed the second quarter of the year on Thursday down 9% — the worst three-month period since the early stages of the pandemic in 2020 — and was down 16.6% year-to-date.

Global market sentiment remains gloomy as the war in Ukraine shows no sign of abating and inflationary pressures continue to mount, prompting central banks to embark on aggressive monetary policy tightening and exacerbating fears of a global economic slowdown.

Shares in Asia-Pacific were lower overnight with Japan’s Nikkei 225 leading losses in the region, after the Bank of Japan’s quarterly business sentiment survey posted a sharp decline in the April-June period.

However, China’s manufacturing activity expanded at its sharpest rate for 13 months in June, boosted by resurgent output after the easing of Covid-19 lockdown measures.

U.S. stock futures also retreated in early premarket trade after the S&P 500 closed out its worst first-half performance since 1970, dropping 20.6% year-to-date by Thursday’s close.

Back in Europe, Reuters reported Thursday that the European Central Bank will on Friday begin a process of buying bonds from southern European nations, including Italy, Spain, Portugal and Greece. The ECB will reportedly use the proceeds from maturing German, French and Dutch debt, in a bid to cap spreads between their respective borrowing costs.

On the data front, a flash euro zone June inflation reading is due Friday morning, along with manufacturing PMIs from Germany, France, Italy and Spain.

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