Good morning and welcome to the stock market today! Investors are waiting for the April payroll update later this week, Peloton (NASDAQ:PTON) is recalling its treadmills and investors continue to sort through a rush of earnings news. So what will the stock market do today?
- The S&P 500 is up by 0.18%
- The Dow Jones Industrial Average is down by 0.09%
- The Nasdaq Composite is up by 0.31%
So what else will the stock market do today? Here are some of the top stories.
What Will the Stock Market Do Today? Talk Crypto.
Bitcoin (CCC:BTC-USD) is coming to a bank near you, Elon Musk is about to pump Dogecoin (CCC:DOGE-USD) on Saturday Night Live and Carole Baskin of Tiger King fame is about to launch her own crypto coin.
In summary, cryptocurrencies are red hot right now.
Bitcoin prices are holding steady near $55,000, while altcoins are on a tear. Ethereum (CCC:ETH-USD) prices have been soaring, as the BTC alternative gains steam. Also helping matters are coming upgrades to its blockchain and growing interest in decentralized finance. And DOGE, the coin of meme investors, just hit another all-time high. Ahead of its SNL appearance, it has racked up a ton of support, including from the Winklevoss twins.
Underneath all the hype is an interesting story… one that could soon affect consumers around the U.S.
According to CNBC, crypto custody firm NYDIG is partnering with hundreds of smaller banks across the United States to give customers direct access to Bitcoin. Essentially, this means that customers would be able to buy, sell and hold BTC through their existing accounts.
So what is the takeaway for investors? The first thing to note is that banks are clearly responding to the rise of fintechs. Right now, money flows into the likes of Coinbase (NASDAQ:COIN) and Robinhood, and banks are missing out on the crypto pie. This means banks need to step it up, and the end result could be some added convenience for customers.
However, as CNBC reported, another interesting takeaway is the pressure this could put on retail banking giants like JPMorgan Chase (NYSE:JPM).
Hedge Funds Are Selling
The push and pull continues on Wall Street.
The stock market is at all-time highs, but the big players are selling. Bank of America said that its institutional clients sold single stocks and exchange-traded funds for the second consecutive week, and its clients were net sellers for the third consecutive week. Hedge funds were also sellers… for the fifth consecutive week.
Broadly, this means that institutional investors and hedge funds are expecting stock prices to fall. But why?
As MarketWatch reported this morning, a key answer lies in recent comments from Treasury Secretary Janet Yellen. Ahead of the April payroll report on Friday, these clients are getting nervous. That is because consensus estimates are overly bullish for April, and the report could force the Federal Reserve to reckon with its current bond-buying stance. In other words, a huge jump in job creation will challenge the idea that current Fed policies are still necessary.
With that in mind, it makes sense that institutional clients are concentrating their selling on the communications service and information technology sectors. InvestorPlace contributor William White wrote about the selloff in tech stocks yesterday, noting the fear Yellen sparked about a rise in rates. These growth-focused equities particularly benefit from a low-rate environment. That makes sense then that Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) and others stumbled on Tuesday.
One more thing to watch: Retail investors are not backing down yet. In fact, Axios wrote that households increased their exposure to stocks to 41%, a record high.
Supply Crunch Meets Tree Huggers
In the months leading up to and following the election of President Joe Biden, clean energy investments have been in the spotlight. That is because Wall Street has pinned its hopes for the Democrat on opportunities for green profits.
Recent weeks have delivered executive action on this front. Biden’s American Jobs Plan tackles clean energy infrastructure, allocating money for EV charging networks and research and development in key sectors. His administration has introduced new plans for phasing out hydrofluorocarbons, rejoined the Paris Climate agreement and taken action against the Keystone XL pipeline.
For investors betting on clean energy, those are all good steps. Now, a supply crunch could disrupt everything.
As Ben German wrote for Axios this morning, scaling up clean energy plans will require huge quantities of minerals like lithium, cobalt, nickel, graphite and copper. Under current estimates, demand for these minerals will quadruple over the next two decades. Our supply chains may not be able to keep up.
So what is the bottom line? Acknowledging that our current investments in these minerals falls short, the International Energy Agency is making some recommendations. These include R&D spending to find cheaper and more available alternatives.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.
