Nasdaq & SP500 Plunge: What’s Behind the Drop? (How it Affects Crypto)

The S&P 500 and Nasdaq spiraled downward, gutted by a steep plunge in microchip stock amid OPEX options expiry and fears of a return to the US-China trade wars – but what about Bitcoin?

Microchip stocks plummeted 6.8%, with the Philadelphia SE Semiconductor index experiencing its steepest drop since March 2020 after whispers of impending Chinese trade bans.

China’s Heng Seng sinks 3% as President Trump officially accepts the republican nomination for President of the United States and threatens new wave of tariffs…

The Trade War Is Back!! https://t.co/qc5VL2gZ3p pic.twitter.com/uwH21hPmXs

— Nicholas Mugalli (@RealNickMugalli) July 19, 2024

Additionally, the Nasdaq dropped -2.8%, hit hard by declines in stars like Nvidia and Apple, while the S&P 500 slipped -1.4%.

Here’s how this stock slaughter affects crypto and the broader economy:

Beyond the S&P500: Impact on Small Caps and Market Resilience

The hot streak of the Russell 2000 hit a wall off the news of the stock slaughter, sparking interest in undervalued equities and sectoral diversity.

Despite market turbulence, positive economic data emerged, and crypto is also rocketing.

Housing starts and building permits blasted past expectations, fueled by thriving multi-unit projects despite single-family setbacks. Industrial output exceeded June forecasts, highlighting U.S. economic strength and the Fed’s inflation control.

In crypto news, the total market is up 1.71%, with altcoins like Solana and Near up over 5% in the last 24 hours.

Earnings Season Developments and Market Performance Outside of S&P 500

On the Federal Reserve side, the Fed’s Beige Book (a cohesive publication of notable economic findings) report highlighted moderate economic expansion from late May to early July, coupled with signs of softening in the job market.

Market expectations of a rate cut in September stood at 93.5%, reflecting ongoing uncertainties and monetary policy considerations.

As it stands, the market is flashing signs of health, albeit the average American still feels squeezed as hell. However, it could be the spark that ignites the fire, especially considering a Trump presidency.

While the jury is out on whether Trump can steer the entire economy back on track, if he is elected in November, risk-on assets will explode in stride.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.