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Markets bounce back into the green on declining GDP, bitcoin rallies to over $23,000

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Yahoo Finance Live examines positive market reactions to news of declining GDP, in addition to looking at sector gains, the bond market, and bitcoin pricing.

Video Transcript

SEANA SMITH: Rachelle, we're looking at a lot of green right now. And Dave, this is for the second day in a row, we have the Dow up 1%. The NASDAQ, same thing, up just about 1% on the heels of yesterday's 4% drop. And the S&P up another 1.2% today.

DAVE BRIGGS: And it's been pretty typical on day one of the Fed to see the markets bounce at least 1 and 1/2% gain of the S&P in each of the last three Fed meetings. But the difference here is the next day because they had fallen and lost those recoveries the last three Fed raises, and today, we've kept them.

What's interesting is we're looking at the best month performance of the year with so much bad news baked in. And you saw them fall on the news of the GDP, and then go back up. It's almost like we're saying, OK, it's bad, but it's not as bad as it feared. It's a lot of-- it's mirroring some of the earnings with Microsoft and Alphabet. Bad, but not as bad as we thought, and almost like we're pricing in that pause from the Fed. Down the road, maybe they won't be as hawkish as feared.

SEANA SMITH: Yeah, it certainly seems like that is enough to get investors excited today. Over the past month, the S&P up just about 6 and 1/2%. Let's take a look at the sector action today because it's a little bit interesting seeing the leadership. It's actually from some of these defensive plays. So utilities, real estate are up there amongst the leaders, and then, of course, followed by industrials, consumer discretionary, materials. Communication services the only sector in the red this afternoon.

Let's take a look at yields when we're talking about some of the movement that we're seeing in the equity markets. The bond markets have been reacting as well. The 10-year note off again today, now trading at just about 2.69. We're also seeing movement to the downside in the five-year yield. Real quick, I want to bring up Bitcoin because crypto markets are interesting. We were talking yesterday. It's so hard to make sense of these moves, Dave. Year-- or over the past month, up just about 17%. Today, up just over another 5%.

DAVE BRIGGS: Yeah, are they or are they not correlated to the markets? It's just-- look, it's almost like meme stocks at this point. You just give up trying to figure out the why. At one point, they were a hedge against inflation. We've now thrown that out. But a two-day rally for Bitcoin certainly making investors happy that lost their shirts a couple of months.

SEANA SMITH: Yeah, it certainly is. And Rachelle, when we take a look at this movement to the upside, breaking well above that 20,000 level that so many crypto investors were focusing on, and now it looks like we're getting pretty close to 25,000 for Bitcoin.

RACHELLE AKUFFO: I mean, and this is incredible. Obviously, we've had a lot of predictions about where Bitcoin would be perhaps at the end of the year. We had some analysts saying as low as perhaps 13,000 or even 10,000. And as Dave was saying, that correlation kind of hard to make sense of. Tracking equity markets now not really an inflation hedge. And when you can't really tell what's moving Bitcoin, it does make it harder to have faith in it, as we continue to see from the likes of Charlie Munger, who has literally no interest in Bitcoin because he's like, I don't get it. This is a fool's errand.