The Wall Street rally in the first seven months of this year suffered a severe setback consecutively in August and September. Market participants remain highly concerned as the Fed warned of one more rate hike of 25 basis points by the end of this year and pursued a higher interest rate regime for a longer period. The first rate cut is not expected before September 2024 and the inflation rate is unlikely to decline to the central bank’s target rate of 2% before 2026.

A higher market interest rate is detrimental to high-growth sectors like technology, consumer discretionary and cryptocurrency. As a result, the crypto space is likely to face uncertainty in October. Prices of major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Dogecoin (DOGE) and BNB (BNB) likely to remain volatile.

Near-Term Concerns

Following the September post-FOMC statement by Fed Chairman Jerome Powell, the yield on the short-term 2-Year U.S. Treasury Note reached 5.461 %, its highest level since 2006. The yield on the benchmark 10-Year U.S. Treasury Note touched 4.639%, its highest level since 2007. Investors are worried that soaring yields on U.S. government bonds are giving signals for a recession in the near future.

On Sep 27, crude oil prices rose to their highest settlement level year to date. The global benchmark — the Brent crude — rose $0.16 to close at $96.71. The U.S. benchmark — the Western Texas Intermediate crude — increased $0.2 to close at $93.88. Investors remained highly concerned about oil prices as it will increase transportation costs and in turn inflate the aggregate price level.

Despite a steady decline since June 2022, the inflation rate still remains well above the Fed’s 2% target level. Higher crude oil prices will make Fed’s task tougher. Moreover, on Sep 26, The ICE U.S. Dollar Index (DXY), a measure of the currency against a basket of six others, rose 0.4% to touch 106.71, its highest intraday level since Nov.30, 2022.

The Conference Board reported that the index for consumer confidence in September came in at 103 compared with 108.7 in August. September marked the second consecutive month of the index’s decline and the largest monthly decline for the index since December 2020.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 73.7 in September compared with 83.3 in August and 88 in July. Notably, any reading of the Expectations Index below 80, historically signals a recession within next year.

Stocks in Focus

NVIDIA Corp. NVDA is a semiconductor industry giant and one of the biggest success stories of 2023. Being a leading designers of graphic processing units (GPUs), the NVDA stock usually soars on a booming crypto market. This is because GPUs are pivotal to data centers, artificial intelligence, and the creation of crypto assets.

NVIDIA’s expected earnings growth rate for the current year is more than 100% (ending January 2024). The Zacks Consensus Estimate for its current-year earnings has improved 2% over the last 30 days. NVDA currently sports a Zacks Rank #1 (Strong Buy).

Robinhood Markets Inc. (HOOD) operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.

Robinhood Markets has an expected earnings growth rate of 57.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 18% over the last 60 days. HOOD currently carries a Zacks Rank #2 (Buy).

Interactive Brokers Group Inc. IBKR is a global automated electronic broker. IBKR executes, processes and trades in cryptocurrencies. IBKR’s commodities futures trading desk also offers customers a chance to trade cryptocurrency futures.

Interactive Brokers Group has an expected earnings growth rate of 38.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 60 days. IBKR currently carries a Zacks Rank #2.

Coinbase Global Inc. COIN provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.

Coinbase Global has an expected earnings growth rate of 84.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 30% over the last 60 days. COIN currently carries a Zacks Rank #3 (Hold).

Block Inc. SQ is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications to run on programmable blockchains. SQ is also one of the largest Bitcoin investors.

Block has an expected earnings growth rate of 69% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days. SQ currently carries a Zacks Rank #3.
Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report

NVIDIA Corporation (NVDA): Free Stock Analysis Report

Block, Inc. (SQ): Free Stock Analysis Report

Coinbase Global, Inc. (COIN): Free Stock Analysis Report

Robinhood Markets, Inc. (HOOD): Free Stock Analysis Report

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