U.S. Stock Indices Drop with Rise in Treasury Yields, Impacting Gold and Bitcoin Values

B. Ali
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On Wednesday, the prices of major U.S. stocks like Dow Jones, Nasdaq, and S&P 500 dropped. This happened because the interest rates on 10-year Treasury bonds increased to 4.102%. When interest rates go up, it affects different investments, making investors feel uncertain and causing stock prices to drop.

Hence, the higher interest rates made investors less interested in stocks, gold, and Bitcoin. As a result, both gold and Bitcoin prices dropped by about 1%. This shows that when one part of the financial system changes, it can affect other parts too.

Therefore, the news of increased interest rates led to a drop in major U.S. stock prices, influencing investor sentiment. Consequently, both gold and Bitcoin prices fell by approximately 1%, reflecting the interconnected nature of the financial market.

Uncertainty Surrounds U.S. Federal Reserve’s 2024 Plans Amid Rate Cut Speculation

People are uncertain about the U.S. Federal Reserve’s plans for 2024. Some believe they might lower interest rates by March, following comments from Federal Reserve Governor Christopher Waller. He suggested a possibility of rate reduction but emphasized a cautious approach, saying, “We don’t need to lower rates quickly.”

Afterward, the interest rates on 10-year Treasury bonds rose by 0.98%, marking a total 4.4% increase in the last month, reaching 4.106% by January 17, 2024. Meanwhile, 2-year Treasury yields went up by 3.08%, but they are still 2.16% lower than the previous month. Presently, almost everyone (97.4% chance) expects the U.S. central bank to raise rates in their upcoming meeting on January 31, 2024.

Bitcoin’s Performance, Gold Trends, and Cautious Financial Markets Amidst Federal Reserve Speculations

The CME Fedwatch tool suggests a 52% chance that the central bank might lower interest rates by March 2024. Looking at precious metals, the current market price for one ounce of gold is $2,006. In the last day, it dropped by 1.09%, and over the past month, it decreased by 0.66%. However, in a six-month view, gold has shown positive growth, gaining 1.86%.

On January 17, Bitcoin decreased by 1.02%, and in the past week, it dropped by over 7%. However, considering the broader view of the last six months, Bitcoin has shown strong growth of 43%, outperforming gold during the same period.

On Wednesday, Bitcoin had a calm day, but the overall value of the entire crypto market increased by 0.49%, reaching $1.69 trillion. The Dow Jones Industrial Average slightly decreased by 0.25%, and the Nasdaq Composite dropped by 0.59% at the market close. The S&P 500 also experienced a 0.56% decline, while the Russell 2000 had the most significant drop, ending the day with a 0.73% decrease. Currently, financial markets are being cautious, especially as they await the Federal Reserve’s strategies for 2024.

 

About B. Ali PRO INVESTOR

Live webinar speaker and derivatives (Forex, Crypto, and Indices) analyst with a broad range of skills for evaluating financial data, investment trends, technical analysis, fundamental analysis, and the best ways to strategies investment selection.  Expertise: Trading Psychology; Speculative Positioning & Market Sentiment; Technical & Fundamental Analysis.