Tech Lifts Nasdaq 1.2% as Investors Await Fed Decision; Crypto Slips on Weak Demand

Market Snapshot

S&P 500 (SPY) — 766.48 (+0.42%) [Twelve Data] · Nasdaq 100 (QQQ) — 718.36 (+1.21%) [Twelve Data] · Dow Jones (DIA) — 518.92 (-0.03%) [Twelve Data] · Gold (GLD) — 379.69 (-0.61%) [Twelve Data] · Bitcoin (BTC) — 81,697 (-1.32%) [Binance US] · Ethereum (ETH) — 2,392 (-1.73%) [Binance US] · US Oil (USO) — 160.81 (-0.59%) [Twelve Data]

Stock Markets

US equities delivered a mixed session as growth stocks rallied while value lagged, reflecting a rotation back into technology names after Friday's AI-driven selloff. The Nasdaq 100 climbed 1.21%, reclaiming momentum as concerns over the sustainability of AI-related investment appeared to ease in thin trading conditions. The S&P 500 advanced 0.42%, closing at 7,709.63 and holding just above its 50-day simple moving average support at 7,705.46, according to market data cited by FT.com. The Dow Jones Industrial Average slipped 0.03%, ending at 51,966.03 and facing resistance at its 50-day exponential moving average of 52,010.11.

Crypto Markets

Bitcoin fell 1.32% to $81,697 and Ethereum declined 1.73% to $2,392 as crypto markets gave back recent gains despite a return to positive ETF flows. Solana dropped 1.41%, XRP slipped 0.94%, while BNB bucked the trend with a 0.32% gain. According to CoinMarketCap, Bitcoin showed a strong seven-day correlation of 0.90 with the S&P 500, indicating a macro-driven move, though US markets were closed during part of the period.

US spot Bitcoin ETFs recorded $355 million in net inflows on Tuesday, reversing a seven-day streak that drained $1.12 billion from the products, according to CoinMarketCap. Smaller contributions came from Bitwise's Bitcoin ETF at $13.87 million and VanEck. The reversal continued Wednesday, with Bitcoin ETFs pulling $506 million in inflows—their largest daily haul in the recent period—led by BlackRock's iShares Bitcoin Trust with roughly $297 million, followed by contributions to funds managed by Bitwise and Fidelity, CoinMarketCap reported. However, the prior week saw $229 million in net outflows after $681 million the week before, while spot Ethereum ETFs lost $320 million, according to SoSoValue data cited by CoinMarketCap.

Citi analysts argued that weak investor demand and persistent ETF outflows are weighing on Bitcoin more than Strategy's recent BTC sale, according to CoinMarketCap. The bank said Bitcoin's recent sell-off is being driven more by weak investor demand than by the small Strategy sale, highlighting a broader demand problem in the market. The assessment underscores concerns that institutional appetite for crypto exposure remains fragile despite the launch of regulated ETF products.

On the regulatory front, the SEC's proposed "Regulation Crypto Assets" would create a tailored offering regime for certain investment contracts involving crypto assets, according to the SEC. The proposal includes two exemptions from the registration requirements of the Securities Act of 1933, with the first exemption permitting offerings of up to $5 million during a four-month period. The proposal represents a potential shift toward a more accommodative regulatory framework, though details remain subject to public comment. Separately, corporate America is pushing back against the SEC's effort to bring tokenized stock trading to the US, with Broadcom, Verizon Communications, and UnitedHealth among the companies objecting to the regulator's proposal, the Wall Street Journal reported.

Macro & Global Drivers

Macro sentiment remained cautious as investors positioned ahead of the Federal Reserve's October 27-28 policy meeting, with bond yields and inflation expectations dominating the narrative. Treasury yields fell in Asian trade as oil prices declined, but remained elevated overall due to the selloff in French bonds following violent unrest in the country, according to the Wall Street Journal. The latest September US consumer-price inflation print came in above expectations, though investors appear to shift their attention increasingly to the economic impact of high borrowing costs and the sustainability of debt-funded fiscal expansion, the Journal reported.

A Wall Street Journal survey of 71 economists found that higher bond yields won't disappear any time soon, with the benchmark 10-year yield rising from 4.2% at the start of the year to 5.1% this week. Roughly three-quarters of economists think yields will remain elevated, meaning continued pressure on anyone looking for a new mortgage, businesses planning to borrow, and the heavily indebted federal government. The persistence of elevated yields reflects concerns over the Fed's ability to contain inflation without triggering a sharper economic slowdown.

Geopolitical risk remained a background driver. A European Central Bank working paper noted that geopolitical risk raises uncertainty and risk aversion across euro area financial markets and can trigger flight-to-safety behavior among investors and market funds. The Wall Street Journal reported on generational politics moving from the margins to the mainstream, citing riots that shocked France and the "Cockroach" movement across India as examples of social unrest with potential market implications. Bloomberg's coverage of the question "How Will MBS Respond with Saudi Arabia Under Fire?" highlighted ongoing tensions in the Middle East, though specific market impacts were not detailed in available research.

Japanese stocks fell 1.8% in early trade, tracking Wall Street's losses from Friday, according to the Wall Street Journal. Commerzbank Research analysts noted that a theme from Friday has been a further selloff in US technology shares, reflecting growing concerns over the sustainability of AI-related investment. Among the worst performers on Japan's benchmark index was Sumitomo Electric Industries. The yen consolidated against other G-10 and Asian currencies in early trade but may be supported by a risk-off mood, with NAB's Rodrigo Catril noting that an AI-led selloff dominated trade on Friday and prompted a "broad risk sentiment deterioration." Investors are increasingly questioning whether future revenue can justify the capital and financial resources being deployed in AI infrastructure, the senior FX strategist said.

Tech Lifts Nasdaq 1.2% as Investors Await Fed Decision; Crypto Slips on Weak Demand

Market Snapshot

Stock Markets

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Gold & Commodities

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Crypto Markets

Macro & Global Drivers

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