On Thursday, the stock market rallied as investors took some relief from the eight-week losing streak. All of the major stock indexes were able to bounce back from their weekly losses.
While the crypto market took a hit on Thursday, gold was still hovering around the $1,850 per ounce mark. According to Neils Christensen, the head of Kitco's precious metals division, gold markets are still under pressure.
The S&P 500, Dow Jones Industrial Average, and the Nasdaq all rose on Thursday. The S&P 500 had gained 2% to reach 4,057.84, while the Nasdaq had risen 2.7% to 11,740.65. The Dow Jones Industrial Average rose 1.6% on Thursday as it continued to recover from last week's losses.
According to LPL Financial's chief equity strategist, Quincy Krosby, the bounce may signify that investors are starting to believe that the pessimistic predictions about the economy were overplayed.
Despite the market's expected bounce, Krosby noted that the optimism that investors exhibited on Thursday may have been exaggerated. He said that the negative sentiment about the economy, especially regarding the consumer, may have been overblown.
"Although this was an expected, and highly talked about potential 'oversold' rally, the underpinning for today's market climb higher, suggests that last week's doom and gloom about the all-important U.S. consumer may have been overdone, along with the dire recession headlines," said Krosby Thursday on CNBC's Tanaya Macheel and Jesse Pound.
Alex Krüger on crypto decoupling from stocks
Despite the positive sentiment about the market, the cryptocurrency economy continued to fall on Thursday. Bitcoin lost around 0.7%. During the past 24 hours.
Ethereum lost around 6.9%. This was alongside other alternative assets that also experienced significant losses. Due to the recovering market sentiment, many traders are still talking about the potential of cryptocurrencies to break out of their correlation with the stock market.
Alex Krüger noted that the correlation between the stock market and cryptocurrencies had broken down in a statement. He then went on to say that the worst-case scenario for the industry is that it will continue to fall. He also defended his views on the subject, stating that everybody should be able to cope with the situation.
"Apathy and decoupling. The correlation with equities is now broken. It's been largely gone since Monday afternoon. Now equities bounce alone." Krüger said. "Watch people who don't trade and barely watch charts or correlations disagree with this tweet. It's ok. Everybody copes differently."
The host of the popular podcast "Stacks," Luke Martin, noted that cryptocurrencies are still not recovering from their losses despite the positive sentiment about the market.
In response to a question about the lack of movement in the stock market and cryptocurrencies, Martin stated on his social media that the charts show that the two are not precisely correlated. He said that the high correlation between the two assets is related to the Luna collapse, while the post-collapse decline in crypto is not making up for its losses.
"Seeing lots of tweets about stocks [and] crypto decoupling, and crypto not bouncing with stocks," Martin wrote. "Charting gives a better picture of what's happening: 1/ We had high correlation 2/ Luna collapse leads to more severe crypto selloff 3/ Post collapse crypto not making up the difference."