Stocks fell Wednesday as cryptocurrencies rebounded and some members of the Federal Reserve indicated in the central bank’s meeting minutes they were open to discussing the scaling back of asset purchases “at some point” if the economy improves rapidly.
“A number of participants suggested that if the economy
continued to make rapid progress toward the Committee’s goals,
it might be appropriate at some point in upcoming meetings to
begin discussing a plan for adjusting the pace of asset
purchases,” said the minutes from the April 27-28 meeting of the Federal Open Market Committee.
“Various participants noted that it would likely be some
time until the economy had made substantial further progress
toward the Committee’s maximum-employment and price-stability
goals,” the minutes added.
The Federal Reserve also said it remains convinced inflationary pressures will ease in the second half of the year even as a “number of participants” on the FOMC said consumer prices could remain elevated well into next year.
Fed officials, following the lead of Chairman Jerome Powell, have largely been united in public comments with respect to their view that inflation – which is currently running at the fastest pace since 2009 – will slow into the later half of the year as base effects and supply chain bottlenecks ease and the economy returns to full capacity after the coronavirus pandemic.
The Dow Jones Industrial Average fell 292 points, or 0.86%, to 33,768, the S&P 500 declined 0.64% and the Nasdaq fell 0.29%.
Bitcoin prices rebounded to near $39,000 after Tesla (TSLA) – Get Report CEO Elon Musk indicated his electric vehicle company could hold its billion-dollar position in the world’s biggest digital currency.
Musk, whose criticism of bitcoin’s energy use, coupled with a suggestion Tesla could sell its $1.5 billion in holdings acquired earlier this year, helped – along with a renewed crackdown from China – tilt the digital currency into its biggest tailspin of the year this month, with prices falling below $30,000 on Wednesday.
However, Musk tweeted Wednesday emojis of so-called diamond hands, images that are typically interpreted as indications of a “hold” strategy for key assets.
Bitcoin prices earlier Wednesday slumped to the lowest since January, while cryptocurrency peers such as Ethereum and Dogecoin traded heavily in the red, following a renewed crackdown on virtual currencies markets in China.
Bitcoin’s decline was sparked by a post on the official WeChat account of the People’s Bank of China which warned that digital tokens should not be used in either financial markets of the world’s second-largest economy – and the largest crypto market – given that they are not “real currencies.”
Bitcoin has given up gains it made following Tesla’s
announcement on Feb. 8 that it had purchased $1.5 billion of the digital asset. Part of the reason was Elon Musk’s…