Nonfarm payrolls released on Friday fell far below expectations, signaling a weakening economy and causing global markets to plummet. Stocks, cryptocurrencies, forex, and commodities – no sector was spared from the turmoil. The start of the week saw some of the worst days in recent memory. Are things better now?
A bit of context: the U.S. job market data for July showed a gain of only 114,000 jobs, significantly below Wall Street’s prediction of 175,000. This marks the weakest job growth since December of last year and nearly the lowest since the beginning of the COVID-19 pandemic. Compounding these concerns was the rising unemployment rate and the U.S. Federal Reserve's decision not to cut interest rates, unlike other central banks in developed economies. Together, these factors create a potentially explosive mix.
The fear of a recession has caused investors and traders to flee risk, bracing for increasing recession pressures. If you need proof, just look at trading screens across the U.S., Asia, and Europe, which were filled with blinking red numbers heading downward.
So, how are we doing now? Technically, better. A few days later, opportunities to buy at more attractive prices outweighed recession fears. Most assets rebounded after hitting their lowest points on Monday. Driving the rally was the "buy-the-dip" strategy sweeping across various market sectors, from digital assets to stocks.
Ethereum price rallied over the past two days, climbing more than 20% from its Monday low. The second-largest cryptocurrency rose from its early-week nadir of $2,100 to over $2,500 on Wednesday as traders rushed in, pushing prices to a session high of $2,530.
Spot Ethereum ETFs saw massive inflows on Monday, likely because of the plunging price. All nine investment vehicles holding Ether collectively pulled in $49 million in net inflows, with the majority going to BlackRock’s ETF, ETHA.
The rebound spread across major cryptocurrencies and the broader market, with BTCUSD soaring to $58,000 from $49,000 on Monday.
Stocks also rebounded broadly after their worst day since 2022 as bargain-hungry investors found deals in every sector.
The Nasdaq Composite switched to buy mode on Tuesday after the technology sector experienced its worst day in nearly two years. The tech-heavy index rose by 1%, partially offsetting Monday’s 3.5% loss. Bargain-hungry investors scooped up discounted shares – chip giant Nvidia added 4% after suffering a 6.3% loss a day earlier, and EV maker Tesla jumped 0.9%.
The fairly moderate rebound came as traders tried to defend the already lofty valuations of technology mainstays, despite growing fears over AI.
Despite the recovery, the sustainability of the rebound remains uncertain, especially amid ongoing concerns about the broader economic outlook and the future impact of AI investments. Investors should remain cautious and stay informed about economic indicators and market trends.
