The Dow Jones industrial average rose above 40,000 to a record high before closing lower. The Dow finished the day down 0.1%, closing at 39,869.
Meanwhile, the tech-heavy Nasdaq 100 fell 0.3%, while the S&P 500 closed 0.2% lower. The S&P 500 pushed above 5300 for the first time on Wednesday.
- Dow Jones rose to 40,000, an ATH, before closing lower
- Optimism over rate cuts boosted the Dow Jones
- Fed speakers have since calmed rate cut expectations
- Bitcoin is on track for its best week since March
The Dow reached the key 40,000 number after strong corporate earnings and after US inflation data on Wednesday came in at 3.4% year on year, the first time inflation had cooled in 2024. This increased optimism that the Federal Reserve could cut interest rates in the coming months.
However, on Thursday, later in the session, Cleveland Fed President Loretta Mester, New York Fed President John Williams, and Richmond Fed President Thomas Barkin spoke at separate events, warning that interest rates may need to stay high for longer until they have more evidence that inflation will cool towards the Fed’s 2% target. These comments hurt risk sentiment, pulling stocks off the record high.
The big question now is whether stocks can keep rising. There is potential to see more gains in 2024, particularly if inflation cools further, the Fed starts cutting rates, and earnings continue to surprise the upside.
Despite the Dow Jones rising above 40,000, a clear psychological threshold, there are reasons to be cautious. The Federal Reserve has not declared victory against inflation, and there is still a risk that the Fed won’t cut interest rates by as much as the market is pricing in, which could weigh on risk sentiment.
BTC set for best weekly rise since March
While the Dow Jones and U.S. stocks rose to record highs this week, Bitcoin has also pushed higher. It is on track to increase just shy of 9% this week, marking its strongest weekly performance since early March.
Bitcoin started the week trading just below 61,000 and rose to a high of 66,700 on Thursday before easing to its current level of 66,200.
Like stocks, Bitcoin has risen on optimism that the Fed could start cutting interest rates soon. This would create a lower rate environment, boosting liquidity and the Bitcoin price.
BTC ETF volumes at a 7-week high
Meanwhile, Bitcoin ETF volumes hit a seven-week high after several weeks of lackluster performance. The spot ETFs have seen positive flows every day this week; even Grayscale Bitcoin Trust, known for its ongoing outflows, managed to see modest inflows at the end of the week.
Meanwhile, data from Sentiment shows that seven of the largest spot BTC ETFs saw volumes reach $5.65 billion, the highest level since March 24. This surge in ETF activity is a positive for the Bitcoin market.
Strong inflows and record levels in the stock market could point to further gains in BTC/USD.
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