It was a week filled with rallies on Wall Street and in the crypto sphere, as bullish investors doubled down on stocks and bitcoin. Commodity markets also rose, as the U.S. dollar fell against a basket of world currencies.
Stock Rally Zaps Volatility
U.S. stocks settled near record territory on Friday as volatility The benchmark S&P 500 Index closed at 2,55.17, two points shy of a new record.
The Dow Jones Industrial Average finished the week a hair below record highs after blue-chip J.P. Morgan Chase & Co (JPM) reported better than expected quarterly results. Severalof the Dow 30 companies will report earnings next week, including Goldman Sachs Group (GS), Johnson & Johnson (JNJ) and Procter & Gamble (PG).
The technology-heavy Nasdaq Composite Index rose 0.2% on Friday to close at a new record high of 6,605.80.
A measure of implied volatility that tracks the S&P 500 held in the single digits on Friday. The CBOE VIX closed at 9.61, on a scale of 1-100 where 20 represents the historic mean.
Across the Atlantic, Germany’s DAX Index logged another record close after Bayer AG (BAYRY) reached a multi-billion-euro deal to sell a portion of its business. The DAX closed at 12,991.87.
The pan-European Stoxx 600 posted minor gains for the week, but still managed to close at four-month highs.
Crude Oil, Gold Rise
The commodity markets were well supported this week, underpinned by stronger demand and a softer dollar.
In crude oil, U.S. West Texas Intermediate (WTI) rose 4.4% during the week to close at $51.45 a barrel. Brent crude, the international futures benchmark, tacked on 2.8% for the week to finish at $57.17 a barrel.
The market was propped up this week by a myriad of forces, including an improved demand outlook, bullish Chinese data and geopolitical risks from oil-rich Iran. Meanwhile, oilfield services provider Baker Hughes Inc. reported a second straight weekly decline in the U.S. oil-rig count.
In precious metals, gold prices topped $1,300 an ounce after another tepid reading of U.S. core inflation.
Gold for December delivery, the most actively traded futures contract, rose 0.6% on Friday for a weekly gain of 2.3%. The contract closed at $1,304.60 a troy ounce, the highest in almost three weeks.
The price of silver gained 3.7% during the week to close at $17.41. That’s the highest settlement on the Comex division of the New York Mercantile Exchange since Sept. 20.
U.S. economic data were far from disappointing on Friday. The Consumer Price Index (CPI) strengthened to 2.2% annually in September, while retail sales rebounded 1.6% from the previous month.
Cryptocurrencies Deliver Stellar Returns
Cryptocurrencies stole the spotlight this week, as bitcoin staged a massive rally en route to record highs. The BTC/USD exchange rate spiked more than 28% during the week, and briefly traded above $5,800, according to Bitstamp.
Bitcoin’s gains followed speculation that China would soon ease trading restrictions on cryptocurrency. An announcement by Coinbase that it was introducing an ‘instant buy’ program for U.S. traders also seemed to support bitcoin’s cause on Friday. The U.S.-based digital currency exchange has more than 11 million members.
Russia’s stance on cryptocurrency appears to have softened after a top central banker signaled for the closure of online bitcoin exchanges. High level talks between Kremlin officials and the business community have convinced President Vladimir Putin and central bank chief Elvira Nabiullina to pursue a regulatory framework instead of an all-out ban.
After initial apprehension, the broader cryptocurrency market followed suite. Ethereum jumped to six-week highs, while Litecoin also finished firmly higher.
The Week Ahead
Crypto enthusiasts will continue to monitor the news wire next week for regulatory developments from around the globe. On Wall Street, market participants can expect a deluge of third-quarter earnings results from the S&P 500 Index. A steady stream of economic data will also make headlines throughout the week.