Stocks rise, Democrats inch closer, earnings wave, Bitcoin mania

US stocks rose as Wall Street digests several earnings, analyst actions, and as the Biden administration’s endgame raises optimism large parts of his agenda will pass.  The Nasdaq underperformed as mega-cap-tech saw some weakness post-Netflix earnings and ASML’s chip outlook.

Today’s headlines have many investors reshuffling their portfolios.  Biotech stocks diverged as Biogen delivered strong earnings and guidance, while Novavax shares plunged after a Politico report said the company was struggling to meet the FDA’s quality standards with its COVID-19 vaccine.  Novavax is pushing back on the quality concerns and expects to complete multiple ongoing rolling regulatory submissions within the next couple of weeks.  The biotech company has received over a billion dollars from project Warp Speed and is a key vaccine in the global inoculation plan.

Netflix shares declined after an extended rally has many doubting that its stock valuations will hold into next year.  The success of Squid Game has fully been priced in and the problem for the streaming giant is that the 2022 outlook for much of the world will embrace the return to pre-pandemic behavior and not watch shows at home.  Growth in the US and Canada is slowing and that will likely continue as competition grows.

Verizon shares rallied after an impressive earnings report, strong subscriber growth, and better-than-expected guidance for the full year.  Everything was positive from Verizon except for the expected signs of inflation in labor and commodities.

The most important earnings of the day came from ASML.  The chip manufacturer did not give any reasons to be optimistic that the global chip shortage will end soon.  ASML is having capacity issues, a shortage of some materials, and intense demand for early shipments.

Biden’s economic package

President Biden is done messing around and wants to finalize his economic package.  Dreams of a USD 3.5 trillion package are long gone and now it seems like it will be closer to USD 1.75 -1.90 trillion.  This latest offer would be lower than the USD 1.9-2.2 trillion that Representative Jayapal, chair of the Progressive Caucus in the House of Representatives said yesterday.  Biden won’t get all of his agenda pushed through, but large parts will get passed and that should have the economy on strong footing as Americans head to the polls for midterm elections next fall.

Bitcoin hits record high

The cryptoverse is celebrating today.  Bitcoin hodlers are telling Wall Street, “whatcha gonna do when bitcoin mania and the largest growing market run wild on you!”  It has been a difficult path back to record-high territory, but bitcoin has shown it is a very resilient market.  Bitcoin overcame regulatory fears and for now ESG concerns.

A successful Bitcoin ETF launch, with more on the way is also accompanied with a growing chorus of new investors that are scrambling for inflation hedges.  Bitcoin mania is running wild as prices are closer to USD100,000 than they are to the USD30,000 level.

Bitcoin’s bullish momentum could last a lot longer, but the global energy crisis should not be ignored.  Cryptocurrency energy consumption could draw scrutiny from many governments that are battling energy shortfalls.  If the bullish stance goes uninterrupted, bitcoin momentum could make a run towards the USD 75,000 region.  A greenlight towards USD 100,000 seems difficult until the global energy crisis is in the rear-view mirror.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.