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July 18, 2019
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Market Update: U.S. Stocks Plunge as Tech Correction Deepens; NEM Leads Tepid Crypto Market Rally

U.S. stocks extended their slide on Monday, as technology companies entered their deepest correction since 2011. Crypto markets were mostly stable, though the likes of NEM and XRP outperformed.

Stock Selloff Resumes

All of Wall Street’s major opened the week in negative territory, with losses extending to most sectors. The large-cap S&P 500 Index fell 2% to 2,726.22, with ten of 11 primary sectors contributing to the declines. Technology shares were the hardest hit, falling 3.5% as a sector. A total of four sectors declined 2% or more.

The Dow Jones Industrial Average plunged 602.12 points, or 2.3%, to 25,387.18. Goldman Sachs Group Inc. (GS) fell 7.5% after Malaysia said it was seeking a full refund of all the fees it paid the bank for its involvement in a state fund called 1MDB.

A rollover in the Nasdaq intensified on Monday after the tech-heavy index fell 2.8% to 7,00.87. The Nasdaq is now its worst correction since 2011, according to Bloomberg.

Volatility Spikes

The sharp drop in share prices on Monday was accompanied by an equally large surge in expected volatility, signaling turbulence ahead for Wall Street. The Chicago Board Options Exchange (CBOE) Volatility Index, the market’s preferred measure of investor anxiety, surged 16.8% to 20.28. That was the highest level in over a week.

VIX trades on a scale of 1-100, with 20 representing the historic mean. The index tracks inversely with the S&P 500 Index roughly three-quarters of the time. Volatility touched record lows at the beginning of the year and spent much of the third quarter subdued. However, the index has nearly doubled since Oct. 3, a period that has witnessed multiple intense selloffs tied to corporate earnings, trade risks and global growth concerns.

Year-to-date, the volatility gauge has added more than 83%.

NEM Surges amid Quiet Session for Cryptos

NEM leapfrogged the broader market on Monday, gaining more than 20% amid news that Japan’s Coincheck exchange was resuming normal trading of the digital currency.

NEM’s native XEM cryptocurrency was the center of a $400 million heist targeting Coincheck at the beginning of the year. The theft, one of the largest of all time, prompted Coincheck to halt deposits and withdrawals. The platform was later acquired by Monex Group, a leading Japanese online brokerage.

At the time of writing, NEM was valued at $0.1079, having gained 16.7% over 24 hours ago.

The only other major gainer in the top-20 was XRP, which rose 3.9% to $0.521815.

The broader cryptocurrency market was little changed compared with 24 hours earlier. The total market capitalization of all coins was $212.4 billion, up slightly from Sunday levels.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

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