Will the Stock Market Follow Bitcoin and Gold’s Path?
As Bitcoin (BTC) and gold face losses in value, you might be wondering if the stock market will suffer the same fate. However, there seems to be a promising outlook due to the negative correlation between gold and the stock market.
In the past, when the price of gold decreased, the stock market experienced gains, and vice versa. This trend is evident in a recent post on X by Ali Martinez on December 12.
JPMorgan Predicts a Downturn
Despite the optimistic outlook, JPMorgan’s chief global equity strategist predicts a significant downturn for the S&P 500. The strategist forecasts a drop to 4,200 by the end of 2024, citing economic indicators such as slowing global growth, dwindling household savings, and geopolitical risks.
This forecast diverges from the prevailing bullish narrative and has raised concerns among observers.
Market Caution Ahead
Investors are currently proceeding cautiously as they closely monitor key economic events. These include the release of November inflation data and the Federal Open Market Committee (FOMC) meeting scheduled for December 12.
While no immediate interest rate adjustments are expected, all eyes are on the Federal Reserve’s projections for the upcoming year. Speculation about potential rate cuts by the end of 2024 is also contributing to market attention.
Bitcoin, Gold, and Commodities Experience Losses
In recent market shifts, Bitcoin saw a decrease of over 5% on December 11. This decline also affected other cryptocurrencies like Ethereum (ETH), Cardano (ADA), and Polygon (MATIC), causing losses across the cryptocurrency market. The overall market cap dropped to $1.5 trillion, resulting in a loss of $80 billion.
Commodities are also showing vulnerability, with gold and oil experiencing declines of 1.3% and 0.6% respectively. Natural gas witnessed a significant drop of almost 7% due to milder weather forecasts and a larger-than-anticipated decrease in demand.
S&P 500 Witnesses Gains
Despite losses in stock value for most tech giants, the S&P index has shown modest gains, increasing by 0.39% since the previous market close on December 11. This brings the value to $4,622.
Although the “Magnificent 7” tech giants have suffered, other sectors such as financials, utilities, and real estate have made small gains of no more than 1% in their value.
Supported by a strong economy, easing inflation, and the possibility of interest rates reaching their peak, investors have overcome concerns about a potential recession and reentered the stock market.
Hot Take: The Future of the Stock Market
The main question that remains is whether the current robust market rally can continue into 2024 or if an economic slowdown and subsequent stock market crash are on the horizon.
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