Stocks, crytpocurrencies cut losses after morning plunge

Stocks and major cryptocurrencies recovered much of their losses Wednesday after falling sharply earlier in the day.

The Dow Jones Industrial Average closed with a loss of 160 points Wednesday, finishing 0.5 percent lower after falling as much as 586 points Wednesday morning. The Nasdaq composite closed flat after opening with a loss of 1.5 percent and S&P 500 cut an opening loss of 1.4 percent to just 0.3 percent by the closing bell.

The market’s opening dive was driven largely by the continuing sell-off of technology stocks, which had skyrocketed in value since the middle of 2020 before hitting turbulence this year. 

Tesla, Zoom, eBay and Nvidia all fell at least 2 percent during the depth of the decline, and larger non-tech names such as Nike, Chevron, Boeing, Goldman Sachs and Caterpillar also fell sharply.

“It’s a sea of red this morning following Tuesday’s lackluster session, despite a fresh set of solid results from the retail sector,” wrote JJ Kinahan, chief market strategist at TD Ameritrade, in a Wednesday analysis.

The cryptocurrency market also bounced back in part from a steep Wednesday morning plunge that raised questions about whether many popular currecncies have peaked in value.

Bitcoin was down more than 20 percent, falling to roughly $35,000 per coin after hitting a record high of $63,588 on April 13, before recovering to $39,000 by 4:30 p.m. The cryptocurrency had lost nearly all of its gains since the start of 2021. Ethereum plunged more than 30 percent to a price of roughly $2,200 before rebounding to $2,635, and the popular parody Dogecoin was down nearly 24 percent Wednesday afternoon after falling as much as 40 percent.

Kinahan cited China’s decision to ban cryptocurrency transactions and lingering inflation fears as the primary drivers behind Wednesday’s rough open.

“There’s a lot of people looking for fresh catalysts, and without them, the market is treading water and slowly losing ground,” Kinahan wrote. “If the bleeding gets worse today, however, remember that selling out of fear is hardly ever a good idea.”

The surge of selling also forced outages at Coinbase, the leading cryptocurrency exchange, and caused the company’s stock to fall more than 8 percent before closing with a loss of 6 percent. Coinbase went public at $328 barely a month ago and peaked at $342 per share before falling to a new low of $211 on Wednesday.

Binance, another crypto trading platform, also halted leveraged options trading amid the volatility. 

Updated at 4:35 p.m.