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US stocks fell from record highs on Friday after a weaker-than-expected July jobs report revealed fewer jobs added, a rising unemployment rate, and significant downward revisions to prior months’ data. This sparked a market sell-off, with the S&P 500 dropping nearly 2.4% for the week, Nasdaq declining 2.2%, and Dow Jones falling 1.2%. The disappointing labor market data shifted expectations, raising the probability of a Federal Reserve interest rate cut in September to 83% from 38%. Amidst economic concerns, a busy earnings week looms with 122 S&P 500 companies, including Palantir, Eli Lilly, and Disney, set to report, while market volatility post-earnings remains high. Despite the downturn, AI investment continues to drive optimism for US stocks, particularly in tech-heavy segments, as Big Tech earnings reflect sustained spending. Earnings season shows the S&P 500 on track for 10.3% growth, though individual stock reactions are sharper than usual, with investors reacting strongly to any misses or beats. A quieter week of economic news awaits, but the focus remains on corporate performance and potential Fed actions in response to labor market deterioration.
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President Trump signed an executive order to enable 401(k) investors to diversify into private assets, including private equity, venture capital, hedge funds, real estate, and possibly gold and crypto. This directive tasks the Department of Labor and SEC with creating guidelines for incorporating these investments into defined-contribution plans. Proponents argue that private assets offer diversification and higher returns compared to traditional stocks and bonds, with BlackRock's Larry Fink suggesting a future portfolio mix of 50/30/20 (stocks, bonds, private assets). However, experts like Lisa A.K. Kirchenbauer caution against the risks, including low liquidity and complexity, advising investors to limit exposure to 5-10% and fully understand the investments. Major firms like BlackRock, Empower, and Voya are already developing products with private assets, aiming for enhanced returns, but concerns persist about higher fees, lack of transparency, and suitability for average investors. Critics highlight that private assets, often reserved for sophisticated investors, may conflict with the flexibility needed by 401(k) participants and could increase costs, despite recent reductions in plan fees due to index funds. The move aims to democratize access to alternative investments but raises questions about whether regular savers are equipped to navigate these complex options.
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Global risk appetite surged on Friday, driving gains in cryptocurrencies, equities, and gold futures, while oil prices headed for their steepest weekly decline since June, dropping over 4% due to rising US inventories and weak Chinese import data. The total crypto market cap increased by 3% to $3.76 trillion, with altcoins like Ether (+7.3%), XRP (+12%), Solana (+4.7%), and Dogecoin (+8.8%) leading the rally, though Bitcoin lagged with a modest 1.9% rise to $116,781. Bitcoin demand appears to be cooling, with market sentiment shifting from euphoria to caution, evidenced by a 25% drop in spot Bitcoin ETF inflows, reduced network activity, and lower transaction fees. BTC remains stuck between $112,000 support and $120,000 resistance, while options markets show increased hedging below $100,000. In broader markets, Asian indices like the MSCI Asia Pacific Index (+0.5%) and Japan’s Nikkei-225 (+2.3%) gained, buoyed by eased US-Japan trade tensions. Analysts note the crypto rebound aligns with stock market optimism, but warn of potential stagnation for Bitcoin amid a summer lull.
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Binance, the leading global cryptocurrency exchange, is collaborating with Spanish bank BBVA to allow customers to store their assets outside the exchange, according to a Financial Times report. BBVA is one of a limited number of independent custodians supporting Binance in this initiative, as confirmed by sources familiar with the arrangement. This step comes at a time when Binance is under intense regulatory pressure worldwide, highlighted by a $4.3 billion penalty imposed by U.S. authorities in February for breaches in anti-money laundering and sanctions laws. Additionally, Binance’s founder, Changpeng Zhao, received a four-month prison sentence related to these lapses. The partnership with BBVA is seen as an effort to enhance investor trust in the safety of funds, especially in the aftermath of the 2022 FTX collapse, which shook the crypto industry. Neither BBVA nor Binance provided immediate comments to Reuters on the report. This development reflects broader trends in the cryptocurrency sector, where exchanges are seeking to address security concerns and regulatory compliance to maintain credibility and protect user assets amidst ongoing challenges.
