ASX set to slip as Wall Street falls; bitcoin jumps to record

Stocks fell on Wall Street on Wednesday (US time), dragged down by losses at large technology and communications companies.

As of mid-afternoon, the S&P 500 is down 0.7%, the Dow Jones is down 0.7% and the Nasdaq is down 1.8%. The Australian stock market is poised to turn lower, with futures at 6.40 am AEDT pointing to a 2-point drop at the open.

Losses from tech companies weighed on the market. Apple fell 1.3 percent and chipmaker Advanced Micro Devices lost 4.2 percent. The big communications companies also fell. Google’s parent company Alphabet fell 1.2%. Facebook’s parent, Meta, fell 1 percent.

Businesses that rely on direct consumer spending have gained ground. General Motors was up 2 percent and Under Armor was up 1.8 percent.

Investors received another disappointing update on rising inflation. The Labor Department reported that prices for American consumers increased 6.2 percent in October compared to the previous year, as rising costs for food, gas, and housing left Americans grappling with the rate. the highest inflation since 1990. The rise in inflation was stronger than economists expected and follows a report Tuesday that wholesale prices rose 8.6 percent in October, matching a record annual gain.

Bitcoin hit another record high and is flirting with $ 69,000 for the first time after inflation data bolstered the argument that the cryptocurrency is a hedge against mounting cost pressures.

The largest digital asset by market value rose as much as 1.9 percent to $ 68,991 on Wednesday, beating the previous high set Monday night in New York trading. Other coins were up as well, with the Bloomberg Galaxy Crypto Index, which tracks major cryptocurrencies, gaining as much as 2.4 percent to its highest level since May.

Bond yields rose significantly after the latest consumer price report. The 10-year Treasury yield rose to 1.52 percent from 1.43 percent late Tuesday.

The broader market is showing signs of cooling after weeks of solid earnings as Wall Street continues to grapple with the impact of persistent rising inflation. Investors are also trying to assess how different industries will benefit as the pandemic subsides.

“It’s a fight between growth and value and neither one is winning lately,” said Tom Martin, senior portfolio manager at Globalt Investments. “You will have a decent market until the end of the year and at some point, you will see that people are really starting to try to position themselves for what they think 2022 could be.”

Rising inflation has been a key concern for investors as they assess the pace of the economic recovery and prepare for the Federal Reserve to begin cutting its bond purchases, which has helped keep interest rates low.

Companies are facing higher commodity prices, along with supply chain problems that threaten to hurt earnings growth. Consumers face higher prices for a wide range of products, and that has raised concerns that a possible setback in spending could slow the recovery.

The latest round of corporate earnings allayed some of those fears, as many companies managed to report strong results.

DoorDash soared 15 percent after reporting surprisingly strong third-quarter revenue and announcing that it is buying Finnish delivery service Wolt Enterprises, expanding its reach to Europe and other markets. Entertainment giant Walt Disney will report the results after the closing bell.

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