Bitcoin rose more than 5% to a two-week high on Friday after the SEC moved forward with a plan to allow digital versions of securities to start trading in the US, according to Nasdaq. The climb came on a mixed day for US equities, with cryptocurrency-exposed shares leading gainers even as rising oil prices and bond yields pulled the broader market lower.
Nasdaq reported the S&P 500 Index ($SPX) finished down 0.11%, the Dow Jones Industrial Average ($DOWI) fell 0.39%, and the Nasdaq 100 Index ($IUXX) gained 0.09%. December E-mini S&P futures (ESZ26) slipped 0.15%, while December E-mini Nasdaq futures (NQZ26) added 0.04%.
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Key facts
- Bitcoin (^BTCUSD) gained more than 5% to a two-week high after the SEC advanced a plan to allow digital versions of securities to trade in the US, per Nasdaq.
- Strategy (MSTR) rose more than 11% to lead Nasdaq 100 gainers, and Coinbase Global (COIN) climbed more than 10% to lead the S&P 500; MARA, Circle, Bullish, and Robinhood each gained more than 7%.
- WTI crude rose nearly 1%, lifting inflation expectations, and the 10-year T-note yield rose 6 basis points to 5.00%.
- Citadel Securities estimated about $7 trillion of options were set to expire in the quarterly triple witching event, one of the largest ever.
- Japan’s central bank raised its policy rate to 1.25%, the highest in 31 years, in a 7-2 split vote, CNBC reported.
Oil, yields and soft data weigh on sentiment
Crude strength and climbing Treasury yields set the tone. October WTI crude (CLV26) rose nearly 1% as Middle East tensions continued to disrupt supplies, though gains were capped by hopes that diplomacy can end hostilities and restore flows. Reuters reported that China privately asked Iran to help rein in Houthi militants in Yemen, who have attacked Saudi energy facilities and moved toward the Bab-el-Mandeb strait.
Some supply is still getting through. US Energy Secretary Wright said 18 million barrels of crude and refined products passed through the Strait of Hormuz on Tuesday, and Saudi Arabia said it seeks to restore about half the capacity of the East-West pipeline within days after a drone-related shutdown. The pipeline carries 7 million barrels per day, and Saudi Arabia told OPEC its August output fell to 6.238 million bpd, the lowest since 1990.
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US economic data added pressure: August manufacturing production unexpectedly fell 0.3% month over month against expectations of a 0.3% rise, the largest decline in 10 months, and leading indicators fell 0.1% versus expectations of a 0.1% increase, the first drop in five months. Markets priced a 58% chance of a 25 basis point Fed rate hike at the October 27-28 FOMC meeting, after the Fed raised rates by 25 bp on Wednesday.
Chips and crypto stocks offset software weakness
The iShares Semiconductor ETF (SOXX) rose more than 1%, with SanDisk up more than 6% and Lam Research and Applied Materials each up more than 4%. Software and cybersecurity names fell, with Thomson Reuters, Oracle and IBM each down more than 3%, and Cloudflare down more than 5%.
Individual movers included Xenon Pharmaceuticals, down more than 29% after pausing enrollment in clinical studies for major depressive disorder and bipolar depression, and Nucor, down more than 5% after guiding to Q3 EPS of $5.55 to $5.65 against a consensus of $5.99. Netflix fell more than 4% after Wells Fargo downgraded it to underweight. Macom Technology and Yeti Holdings rose after upgrades.
In Japan, the market reaction to a rate increase ran against type, per CNBC. The BOJ lifted its policy rate to 1.25%, its highest since 1995, just three months after its previous increase. The yen weakened past 157 per dollar, the 10-year Japanese Government Bond yield slipped, and the Nikkei 225 gained 1.5%.
Strategists pointed to the 7-2 split, with board members Toichiro Asada and Ayano Sato dissenting in favor of holding rates steady. Asada noted core inflation was below 2%, and Sato said economic and price developments had not substantially accelerated. August core inflation stood at 1.7%, down from 1.8% in July. Sumitomo Mitsui Banking Corporation’s Hirofumi Suzuki called the two dissent votes a surprise. State Street’s Masahiko Loo said the absence of an updated outlook report limited the BOJ’s ability to reinforce a hawkish message, and Oxford Economics’ Shigeto Nagai said the dissenters signaled Prime Minister Sanae Takaichi was not convinced to accede to the US request for faster hikes. EFG International’s Sam Jochim expects a terminal rate between 1.75% and 2% in 2027. The BOJ said it would keep raising rates as conditions develop but acknowledged growth may decelerate on high oil prices.
Why it matters
An SEC framework for digital versions of securities would give tokenized products a US trading venue, a change from the enforcement-led posture of prior years, and crypto equities responded immediately. The move lands in a week when the Fed raised rates and signaled more to come, lifting the 10-year yield to 5%. Japan’s hike, meanwhile, shows a major central bank tightening even as its currency fell, a signal that carry-trade dynamics and policy communication matter as much as the rate decision itself.
What to watch
Index rebalancing takes effect after the close, with Bloom Energy, Illumina, and Everpure added to the S&P 500 and SpaceX receiving a weighting boost in a Nasdaq 100 rebalance. The next FOMC meeting is October 27-28, and the ECB meets October 29, with markets pricing a 62% chance of a 25 basis point ECB hike.
This article is not financial advice, and markets for Bitcoin, equities and rates are volatile and uncertain.
Sources: Nasdaq, Cnbc
