Monday brought a tough day to Wall Street, as investors suddenly stopped having faith in the power of technology stocks to help the bull market continue. The Nasdaq Composite posted steep losses along with the small-cap Russell 2000 index, while the broader S&P 500 and the Dow Jones Industrial Average suffered less extreme declines.
The odd thing about the market lately has been that winning plays don't always seem consistent with each other. For instance, on Monday, the price of Ethereum (ETH +0.81%) climbed above $4,000 for the first time, lifting shares of Grayscale Ethereum Trust (ETHE +0.80%) as well as cryptocurrency exchange company Coinbase Global (COIN +4.25%). Yet another key source of strength came from a decided old-school part of the market, as Southern Copper (SCCO +3.20%) helped led raw materials plays higher. Below, we'll look at some of the reasons why both of these investments are doing well.
How the market fared on Monday
Stock markets were broadly lower, with the Nasdaq taking the worst hit. Most other markets were relatively steady, with crude oil staying near $65 per barrel, precious metals finishing mixed, the U.S. dollar gaining ground, and 10-year Treasury bond yields moving back up to 1.6%.
|
Index |
Percent Change |
Point Change |
|---|---|---|
|
Dow Jones Industrial Average (^DJI +0.02%) |
(0.10%) |
(35) |
|
S&P 500 (^GSPC +0.84%) |
(1.04%) |
(44) |
|
Nasdaq Composite (^IXIC +1.71%) |
(2.55%) |
(350) |
Data source: Yahoo! Finance.
Climbing into the ether
Cryptocurrencies have gotten a lot of attention lately, and Ethereum has been one of the best performers. The price of the crypto token climbed more than 3% from Friday's close, moving above the $4,000 mark for the first time before falling back slightly.
Ethereum has traditionally had a significantly lower price than Bitcoin, acting somewhat like silver does to gold in the precious metals realm. However, investors have noticed that while Bitcoin's primary purpose appears to be as a store of value, the Ethereum cryptocurrency -- known as ether -- serves a business purpose in driving activity on the Ethereum network.
Image source: Getty Images.
A whole host of cryptocurrency applications use the Ethereum network as the framework for their operations. The more of these apps there are, the greater the demand for the Ethereum cryptocurrency.
The rise helped push shares of Grayscale Ethereum Trust up 10% as well. The trust isn't an exchange-traded fund and its price doesn't always track the moves in the underlying ethereum market. Moreover, with interest in cryptocurrency on the rise, exchange giant Coinbase Global saw its stock rise about 10% on the day.
This stock was shiny Monday
Meanwhile, back in the physical world, investment linked to industrial commodities continued to do well. Leading the way was Southern Copper (SCCO +3.20%), which climbed to an all-time high with its 6% gain.
Copper plays a key role throughout the economy. It's a vital material for construction, as it's used for pipes, electrical wire, and roofing. However, it's also increasingly important for cutting-edge technology, with considerable use of copper in wind turbines, electric motors, and networks.
Investors are already expecting a big economic rebound in 2021. Adding fuel to the fire is hope that the federal government will pass a major spending bill to improve infrastructure. That would help boost demand for key commodities like copper even further.
Southern Copper isn't the only copper stock out there, but it's one of the purest plays on the base metal. If the economy does as well as many expect, then Southern Copper and its mining peers could see even further gains.
