1. US markets fluctuate amidst political turmoil and rate-cut speculation
At the start of the week, markets reacted to the aftermath of an assassination attempt on Trump, with analysts predicting that it could increase his odds of re-election in November.
Against that backdrop, US Federal Reserve Chair Jerome Powell addressed the Economic Club of Washington, remarking that recent inflation readings, including last week’s data, “do add somewhat to confidence."
In Canada, Tuesday’s (July 16) consumer price index reading showed a 2.7 percent year-on-year increase in June, down from 2.9 percent in May, prompting discussions of a potential second interest rate cut in July. The S&P/TSX Composite Index rose even higher to a close of 22,995.39, a fourth consecutive record high close.
Multiple US indexes performed positively that day, with the Dow Jones Industrial Average (INDEXDJX:.DJI) also reaching a new all-time closing high of 40,954.48. The Russell 2000 Index (INDEXRUSSELL:RUT) scored its fifth consecutive winning streak, its longest since 2000. The S&P 500 (INDEXSP:.INX) also closed up on Tuesday. However, the Nasdaq 100's (INDEXNASDAQ:NDX) gains were limited by weaker performances from mega-cap stocks such as NVIDIA (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) as small caps extended their rally.
Chip stocks fell on Wednesday (July 17) after a report revealed that the Biden administration is considering further trade restrictions against China. The news brought the PHLX Semiconductor Sector (INDEXNASDAQ:SOX) down by 6.8 percent, its biggest one day drop since March 2020. Compounding the downturn was the revelation of comments made by Trump regarding Taiwan paying the US for its defense against China.
Stocks closed lower across the board as a result, apart from the Dow Jones, which ended at a new record high of 41,198.08 for the third day in a row. The Nasdaq and S&P 500 closed 2.8 and 1.4 percent lower, respectively, led by losses to NVIDIA and Apple (NASDAQ:AAPL). The S&P/TSX Composite Index experienced a decline of 0.6 percent, leaving it at 22,851.17 and bringing an end to its run of consecutive record-breaking closing highs.
Taiwan Semiconductor’s (NYSE:TSM,TPE:2330) quarterly results, released on Thursday (July 18), helped lift the Nasdaq and S&P 500 at the open; however, the gains were reversed as the VIX (INDEXCBOE:VIX) reached its highest level since early May, triggering a selloff. By the end of the day, the Dow Jones had fallen 1.29 percent, the S&P 500 had lost 0.78 percent, the Nasdaq had dropped 0.7 percent and the S&P/TSX Composite Index was down 0.5 percent.
On Friday (July 19), Wall Street’s main indexes opened lower as a global tech outage impacted all sectors. This ended a turbulent week that represented the Nasdaq and S&P 500’s worst since April, feeding fearful investor sentiment toward tech stocks. At the closing bell, the Dow Jones was down 0.93 percent, the S&P 500 dropped by 0.71 percent, the Nasdaq fell 0.81 percent and the Toronto Stock Exchange’s S&P/TSX Composite Index slid by a modest 0.2 percent.
2. Tech outage disrupts industries around the world
A global tech outage caused by CrowdStrike (NASDAQ:CRWD) disrupted systems across multiple industries early on Friday, causing delays to operations in banking, healthcare and media, as well as impeding air travel schedules.
The event was triggered by an update to CrowdStrike’s Falcon Sensor software, a component of the cybersecurity firm’s security operations center platform designed to detect viruses and cyber threats running on Windows operating systems.
CrowdStrike sent an alert to its clients at 5:30 a.m. GMT, and soon after released a statement on its website.
"Today was not a security or cyber incident. Our customers remain fully protected," CrowdStrike CEO George Kurtz reassured users via a post on X, formerly known as Twitter, some hours later.
CrowdStrike promptly identified the root of the cause to be a defect in a content update for Windows hosts. The company began working on solutions to address the issue, with full instructions and resources available on the company’s blog. However, the impact of the crash reverberated across governments and organizations around the world, and the time it took for the fix to be fully deployed depended on individual circumstances.
For devices simply requiring a reboot to apply the update, the solution was able to be swiftly applied. In other cases, the longer process of a manual intervention was required. The length of time also depended on the size and complexity of an organization’s IT infrastructure, as the solution would need to be applied across all systems.
The situation was still unfolding as of 7:00 p.m. EDT on Friday.
3. Bitcoin, Ether prices advance
Bitcoin and Ether showed notable price fluctuations at the start of the week, with both growing by approximately 5 percent in 24 hours, starting the week at US$62,732 and US$3,350, respectively, at 9:00 EDT. The rally was attributed to the perceived higher probability of a Trump victory in the wake of the assassination attempt and the increasing likelihood of Ether ETFs being approved. Ether’s price continued to rise throughout the day, peaking at US$3,489 at 20:00 EDT.
On Tuesday, Bitcoin was priced at US$63,774 and Ether at US$3,409 just before the opening bell. Both experienced volatility through the day and were valued at US$65,144 and US$3,480, respectively, at the closing bell.
Meanwhile, Farside data shows a record daily inflow of US$422 million into spot Bitcoin ETFs on Tuesday, causing the price of Bitcoin to surge 3 percent overnight to US$65,200. Ether also saw significant gains of 2 percent.
A modest devaluation was observed on Wednesday at 9:10 EDT, with Bitcoin valued at US$64,734 and Ether at US$3,46.
Glassnode data released on Wednesday shows that balances across US spot Bitcoin ETFs had reached 900,636 Bitcoin worth more than US$63 billion. As of July 18, the combined cryptocurrency market cap was up 12 percent despite volatility observed throughout the week. Bitcoin was priced at US$63,514 and Ether at US$3,407 at 14:00 EDT.
Friday’s global tech outage, which had a widespread impact, had virtually no effect on the crypto industry, underscoring the strength of decentralization. Despite a dip in price Friday morning — US$64,332 for Bitcoin and US$3,411 for Ether at 9:05 EDT — on the heels of renewed speculation regarding US President Joe Biden’s position as the Democratic nominee, the price of Bitcoin rose to US$67,265 at 16:05 EDT on Friday, while Ether rose to US$3,523.
4. Google may bet on cybersecurity in record-breaking deal
CNBC reported on Sunday (July 19) that Alphabet’s (NASDAQ:GOOGL) Google is in early negotiations to acquire Wiz, a cybersecurity firm. Sources did not provide details, only disclosing that the deal is expected to close “soon.”
In May, Wiz was rumored to be gearing up for an IPO, at which time it had a valuation of US$12 billion. The company’s comprehensive cloud presence offers an attractive solution for large enterprises with substantial computing requirements, allowing them to efficiently manage and optimize their digital infrastructure.
The deal, reported to be worth US$23 billion, would be the largest acquisition in Google’s history and would give the company an advantage over competing cloud providers like Amazon (NASDAQ:AMZN) and Microsoft.
5. SEC sets launch date for Ethereum ETFs
Ethereum saw a significant increase in its valuation after Nate Geraci took to X to weigh in on his prediction regarding the highly-anticipated approval of Ethereum ETFs on Sunday afternoon.
“Welcome to spot eth ETF approval week … I’m calling it. Don’t know anything specific, just can’t come up w/ good reason for any further delay at this point. Issuers ready for launch,” he posted, prompting a 5 percent price increase for Ethereum in six hours. Geraci is co-founder of the ETF Institute.
The next day, Bloomberg ETF analyst Eric Balchunas confirmed Geraci's prediction:
“Nate's instincts were right, hearing SEC finally gotten back to issuers today, asking them to return FINAL S-1s on Wed (incl fees) and then request effectiveness on Monday (July 15) after close for a TUESDAY 7/23 LAUNCH. This is provided no unforeseeable last min issues of course!”
On Wednesday, the US Securities and Exchange Commission (SEC) further stirred enthusiasm by approving the Grayscale Mini Spot Ether ETF. “After careful review, the Commission finds that the Proposals are consistent with the Exchange Act and rules and regulations thereunder applicable to a national securities exchange,” the SEC said in a document. “It is therefore ordered… that the proposals be, and hereby are, approved.
On Friday, the Chicago Board Options Exchange announced that the Franklin Templeton Ethereum ETF will commence trading as a novel listing on July 23; however, the launch would be contingent upon regulatory approval.
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Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
