Tech Markets Surge on Rate Cut Hopes: Bitcoin Breaks US$60,000 as Waymo Unveils 6th Generation Driver
Investors navigated a turbulent week, with markets initially hesitant, before a strong surge fueled by optimistic signals from the US Federal Reserve on Friday, August 23. Federal Reserve Chair Jerome Powell‘s Jackson Hole speech, hinting at impending interest rate cuts, triggered a wave of positive sentiment across the major stock indexes. The Russell 2000 in particular experienced remarkable gains, reflecting heightened interest in mid-cap stocks following the recent trend of positive Fed data. This bullish momentum extended to the crypto market, with Bitcoin breaking the US$60,000 barrier and solidifying its position above it for the remainder of the week. Amidst these exciting developments, Waymo unveiled its 6th generation self-driving technology, marking another milestone in its quest to revolutionize autonomous transportation.
Key Takeaways:
- Rate cut anticipation: Chairman Powell’s suggestion of an imminent Fed rate cut sparked a rebound in the stock market, with the S&P 500 and Nasdaq Composite achieving their eighth consecutive days of gains.
- Bitcoin’s breakout: Buoyed by the positive economic news and investor enthusiasm, Bitcoin surged past the US$60,000 mark, defying recent market volatility.
- Waymo’s innovation: The company’s introduction of its 6th generation self-driving system, boasting improved capabilities and cost-effectiveness, highlights its commitment to advancing autonomous technology.
- AMD’s strategic acquisition: AMD’s purchase of ZT Systems underscores its ambition to solidify its leadership in the data center AI landscape.
- Democrats and crypto: The Democratic Party’s 2024 platform notably omitted a stance on cryptocurrency, raising questions about the potential impact on the sector’s future. However, Vice President Kamala Harris’s campaign advisor hinted at her support for measures promoting the growth of the crypto industry.
Fed’s Rate Cut Signal Fuels Stock Market Surge
The week began with uncertainty, as the S&P 500 and Nasdaq Composite opened below last week’s close on Monday. However, this trend reversed, marking the eighth consecutive day of gains for all three major indexes and the S&P/TSX Composite Index. The Russell 2000 also saw significant gains, climbing 1.1 percent on the day.
Tuesday’s trading remained cautious as investors awaited fresh inflation data. The Bureau of Labor Statistics data released on Wednesday revealed that while the job market is expanding, job growth between March 2023 and March 2024 was lower than previously estimated. Simultaneously, minutes from July’s Fed meeting indicated that policymakers, encouraged by reduced inflation and increased unemployment, considered a quarter percentage point rate cut in July. This development bolstered confidence in a likely rate cut in September, sending the market indexes higher. The Russell 2000 led the charge, surging over 1 percent to close at 2,170.32.
Thursday’s early trading witnessed a continuation of this upward trajectory, with all but the S&P/TSX Composite Index opening above the previous day’s close. Economic data, however, revealed a mixed picture. The US manufacturing PMI declined to 48 in August from 49.6 in July, coming in softer than expected. Conversely, initial jobless claims rose slightly in the week ended August 17, indicating a slight increase in unemployment.
Despite a midday retreat driven by the tech sector, particularly the decline of NVIDIA’s stock price by 4.77 percent, optimism returned on Friday morning. This optimism was fueled by Powell’s speech at the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming.
In this highly anticipated address, Powell, while endorsing an impending rate cut, refrained from specifying the exact magnitude of the reduction. He declared, "The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks."
Powell’s endorsement ignited a surge in all three major stock indexes, with the Russell 2000 leading the charge, climbing more than 3 percent midday. This continued a recent trend of increased investor interest in mid-cap stocks, which has been observed in response to optimistic Fed data over the past couple of months.
The week concluded with a strong finish, all four major indices registering gains of more than 1 percent, with the Russell 2000 recording an impressive 3 percent increase.
Bitcoin Breaks US$60,000, Driven by Positive Economic Developments
Bitcoin’s price dipped below US$58,000 in pre-market trading on Monday, spending the majority of the day at that level before reclaiming its position above US$61,000 overnight.
Tuesday saw another sharp pullback, coinciding with a dip in US stock indexes. Analysts at K33 reported that Tuesday’s seven-day average annualized funding rate was the lowest since March 2023, indicating an increase in short bets and potential for a squeeze.
Wednesday witnessed continued price fluctuations, with Bitcoin trading in the US$59,000 range for most of the day, but ultimately breaking above both US$60,000 and US$61,000 in the final hours of the trading day. Bitcoin maintained its position above US$60,000 for the remainder of the week.
While recent data indicates a slight decrease in Bitcoin demand, long-term holders continue accumulating, according to CoinDesk. Moreover, the number of institutional investors holding Bitcoin ETFs experienced a notable 14 percent growth in Q2 compared to Q1, signifying continued interest from larger market participants.
Analysts at Fairlead Strategies cautioned on Wednesday that Bitcoin could be heading into a near-term downturn, based on a reading of the 14-month stochastic indicator. While the indicator, used to assess momentum and potential trend reversals, previously indicated an overbought condition above the 80 level, it recently crossed below 80, suggesting a potential overbought downturn and price decline.
However, the crypto market reacted with a surge on Friday, fueled by the positive economic developments earlier that day. The likelihood of an impending September rate cut, further solidified by Powell’s speech in Jackson Hole, sent the price of Bitcoin above US$64,000 by 5:20 p.m. EDT on Friday.
Ether also experienced a significant boost, trading above US$2,770 at the same time.
Democrats Remain Silent on Crypto in 2024 Platform, Harris May Offer Support
Ahead of the Democratic National Convention, the party unveiled its 2024 Platform on Sunday, August 18. The document, spanning 92 pages, covers the party’s stance on numerous issues, including economic policy and social justice. However, one significant issue was conspicuously absent: the party’s position on cryptocurrency and web3 infrastructure.
While some in the crypto community expressed optimism that Vice President Kamala Harris might be more open to supporting the industry than the current administration, Harris herself has been reticent about her stance on issues related to the regulation and taxation of decentralized finance.
The platform, however, refers to “Biden’s second term." Considering the tight deadline for finalizing the plan — completed less than a week before President Joe Biden withdrew from the race — Harris may become more vocal about her views on cryptocurrency and web3 infrastructure as the campaign progresses.
During a roundtable discussion at the Democratic National Convention in Chicago, Brian Nelson, the campaign’s senior advisor for policy, stated that Harris would support measures that “ensure that emerging technologies and that sort of industry can continue to grow.”
Prior to Harris assuming leadership of the Democratic campaign, Republican candidate Donald Trump’s embrace of Bitcoin and other digital assets seemed to give his party an advantage with crypto-focused voters.
These two candidates have been engaged in competition on the crypto-betting platform Polymarket. While the odds of a Democratic win surged by 12 percent on Polymarket two weeks ago, propelling Harris into the lead, Trump overtook her this week.
Crypto media outlet Decrypt has suggested that the lack of a clear stance on cryptocurrency and Bitcoin in the Democratic Party’s platform may have contributed to Trump regaining the lead.
Waymo Unveils 6th Generation Self-Driving Technology
Waymo, a subsidiary of Alphabet, introduced the newest iteration of its self-driving technology, the 6th Generation Waymo Driver, on Monday. As per the company’s press release, this latest version offers enhanced capabilities and more compute power while also being more cost-effective than its predecessor.
The Waymo Driver now boasts a longer range of up to 500 meters and improved resilience to harsh weather conditions. The new hardware also features an enhanced camera-radar surround view and advanced sensor technology, promising enhanced navigation capabilities.
Waymo CEO Tekedra Mawakana shared on LinkedIn that the company’s robotaxi service, Waymo One, has surpassed 100,000 rides per week, double the 50,000 weekly rides reported in May. The company’s fleet comprises Geely Zeekr electric vehicles equipped with the Waymo Driver technology.
Waymo’s journey began as a self-driving project in 2009. The company has since expanded to offer commercial services in Texas, Arizona, and California, and partnered with Uber in May 2023. During Alphabet’s Q2 earnings call on July 23, Jim Friedland, director of investor relations, revealed that Alphabet is committing a US$5 billion investment in Waymo.
These new systems are still undergoing testing, with updates expected to be provided as development progresses.
AMD Expands AI Capabilities with ZT Systems Acquisition
Semiconductor manufacturer Advanced Micro Devices (AMD) announced plans to acquire ZT Systems, a company specializing in the development of servers and network equipment, on Monday. This move, valued at US$4.9 billion and comprising a mix of cash and stock, including up to US$400 million based on post-closing milestones, is part of AMD’s strategy to strengthen its data center AI capabilities.
Dr. Lisa Su, AMD Chair and CEO, stated in a press release: “Our acquisition of ZT Systems is the next major step in our long-term AI strategy to deliver leadership training and inferencing solutions that can be rapidly deployed at scale across cloud and enterprise customers.”
AMD’s share price surged by 4.66 percent on Monday, reaching US$161.57 during trading on Tuesday, marking the company’s highest valuation for the week. AMD’s share price stood at US$154.97 on Friday afternoon, marking a 4.46 percent increase for the week.
As technology continues to evolve at a rapid pace, this week’s developments highlight the ongoing momentum in the stock market, the resilience of the cryptocurrency market, and the relentless pursuit of innovation in the self-driving car sector. While the Democratic Party’s stance on crypto remains unclear, the potential for future support should not be underestimated. As the tech landscape continues to shape the future, these developments offer a glimpse into the exciting possibilities that lie ahead.
