Stocks traded higher for most of Tuesday, but lost steam in the afternoon as Wall Street reacted to a major shake-up in the cryptocurrency space.
Earlier today, crypto exchange Binance said it plans to buy rival FTX’s non-US assets amid liquidity concerns at the company. Notice sent price from Bitcoin tumbling 12.6% to $18,184 (Bitcoin trades 24 hours a day; prices are reported here as of 4 pm).
“Today is a bad day in crypto. Binance has to step in to save Sam Bankman-Fried’s FTX crypto exchange,” said Edward Moya, senior market strategist at currency data provider OANDA. “This is a major setback for many investors in cryptos who are looking at it [Bankman-Fried] is a white knight and one of the leaders in a space that is sure to grow as we move beyond this crypto season. Coinbase Global (coins (opens in new tab)-10.8%) and online trading platforms Robinhood Market (hood (opens in new tab)-19.0%).
Title made a whirlwind evening for the market, with Nasdaq Composite swinging from a gain of nearly 2% at the beginning of trading to a loss of 0.9% in the middle of the afternoon. Price action was steady in the final hours of the session, with the tech-heavy index up 0.5% at 10,616. The wider S&P 500 Index rose 0.6% to 3,828, while blue-chip Dow Jones Industrial Average outperformed (+ 1.0% at 33,160) as Amgen (AMGN (opens in new tab)) added 5.6% in a well-received update to obesity drugs.
Low-Vol ETFs to Consider After the Midterms
Today’s preliminary results come as midterm elections are held across the country. And history suggests the stock market could continue to rise over the next few weeks. “After the election, we would expect a small lift in the equity market over the next month (+1%) – assuming the consumer price index print on Thursday is not ‘hot’,” said Wells Fargo analyst Chris Harvey.
While it will take several weeks to know the full results of the midterms, most hope that Republicans will win control of the House of Representatives. Harvey said that if we see a “red wave” — where the GOP gains control of the House and Senate — defense stocks should continue to do well. This includes the company consumer staples and health sector. Harvey also said a red wave could be beneficial for low-volatility strategies, which tend to see strong relative performance after previous elections in which Republicans control Congress.
For investors looking to add a defensive position to their portfolio, here are 10 low volatility exchange traded funds which offers a low-cost way to provide stability in the middle of the market. Check them out.