Bitcoin is Surging as the Market Inches Up in Anticipation of Economic News

Congress may avert a government shutdown, and investors are reacting to earnings news from Lowe’s, Macy's, Bumble and eBay

• The market is meandering as investors anticipate economic data releases, and a bitcoin surge contrasts with the Magnificent Seven's modest gains.
• Individual stocks are making waves: Macy's and Lowe's are on the rise withg cost-cutting, while investors are reacting to Bumble and eBay earnings reports.
• The government may avert a shutdown, upcoming economic data will impact interest rate expectations and investors are urged to maintain focus.

Stocks closed marginally higher yesterday in a session marked by indecision. The Nasdaq Composite edged up by 0.4%, while the S&P 500 saw a modest 0.2% gain. Despite the lackluster performance, both indices remain on track to end the month with gains.

The market appears to be in a holding pattern ahead of a flurry of economic data releases scheduled for the week. This morning, the core personal consumption expenditures (PCE) prices pose by 2.10%, slightly below the expected 2% year-over-year increase. However, tomorrow's release of the PCE index, expected to show a 2.8% year-over-year increase and 0.4% month-over-month growth, could provide crucial insight into Federal Reserve interest rate policy.

Bitcoin has emerged as a significant market mover, with its price surging by 40% this year to surpass $60,000. The cryptocurrency's rally contrasts sharply with the more modest gains of the Magnificent Seven stocks, which have collectively risen by 12% this year. The allure of bitcoin during periods of record-high stock valuations underscores its appeal as an alternative investment lacking conventional valuation metrics.

Individual stocks in the news

Several stocks made headlines yesterday. Viking Therapeutics VKTX saw its market cap triple following positive Phase 2 trial results for an anti-obesity drug. Shares in Macy's (M) rose nearly 3.5% after the chain announced plans to shutter 150 stores, while Lowe's (LOW) gained 1.8% on improved profits attributed to cost-cutting measures.

Apple (AAPL) announced it will discontinue its automated car project in favor of bolstering its generative artificial intelligence (AI) team, nudging its shares up by just under 1%. Conversely, Google parent Alphabet (GOOG) witnessed a 10% stock decline this month, largely because of issues with its chatbot, Gemini, diverging from the broader positive trend among the Magnificent Seven.

Bumble (BMBL), grappling with disappointing earnings, announced a workforce reduction of 350 employees, sending its shares down by 15% in premarket trading. Meanwhile, eBay (EBAY)made a positive earnings announcement and expanded its share buyback program, propelling its stock up by 4%.

Other news

Concern in the market over a possible government shutdown has eased after congressional leaders met with President Biden in the White House. With looming economic data releases, particularly the PCE index, market sentiment may shift, influencing expectations regarding interest rate cuts. Despite indications pointing toward no rate cut until June, this week's data could alter those projections. Amid these developments, investors are advised to remain focused on their long-term objectives.

JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan 

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