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Tech Hiccup, Crypto Drop, Fed Fallout – 5 Things You Must Know

U.S. stocks set for a muted open; bitcoin falls below $46,000; the Fed hints at faster and sooner rate increases; Nike Sues Lululemon; a car with paint that changes color.

Here are five things you must know for Thursday Jan. 6:

1. – Stocks Set for Muted Open After Steep Losses

U.S. stock futures were mixed to lower early Thursday morning as global stocks faced pressure following the tech-heavy Nasdaq’s worst one-day fall since last February and the Dow Jones Industrial Average's posted its first triple-point plunge of the year amid expectations of a faster timetable for rising interest rates. 

Futures contracts tied to the Dow Jones Industrial Average are indicating an 18-point opening gain, while those linked to the S&P 500 are priced for a 3.5-point drop. Futures tied to the tech-focused Nasdaq Composite are indicating a 35.5-point fall at the start of trading as benchmark 10-year Treasury note yields trading up slightly at 1.732%.

The Nasdaq closed off Wednesday down more than 500 points, or 3.3%, its biggest drop since February 2021 and the worst start to a calendar year since 2008, when it dropped 5.6% in the first three trading sessions.

The Nasdaq-100 index, which is comprised of the biggest companies in the Nasdaq, now has a year-to-date decline of 3.36%, also representing the steepest slide to begin the first three days of a year since the global financial crisis.

What the Federal Reserve Means for Your Portfolio in 2022

The Dow ended Wednesday down 392 points, or 1.07%, to 36,407, while the S&P 500 fell 1.94%.

Expectations that the Federal Reserve may move sooner than expected to begin tightening monetary policy by raising benchmark interest rates spurred what market-watchers call “rotation” out of tech stocks and into sectors and companies that do better in a rising interest rate environment.

Economists and investors have been recalibrating their expectations of how inflation, which is currently running well above the Fed’s 2% annual target, will be tamped down by the Fed, and what that will mean to companies that have relied on low interest rates through the pandemic.

2. – Cryptocurrencies fall as Bitcoin Slides Below $46,000

Top cryptocurrencies including Bitcoin, Ether, Solana, Cardano and XRP posted steep losses on Thursday as bitcoin fell to as low as $42,700 after losing a major support level, causing a sell-off in the broader altcoin market.

Among the top 10 cryptocurrencies by market capitalization, tokens of Ethereum rivals Avalanche, Terra, and Solana -- the so-termed ‘SoLunAvax’ trade -- fell as much as 12% in the past 24 hours, according to Coindesk. Polkadot, another Ethereum rival, saw its tokens fall by 14% before seeing a slight revival in Asian hours on Thursday.

Bitcoin vs. Ethereum: What Are the Differences?

Tokens of these networks have risen by several hundred percent over the past 12 months, mainly as investors looked for blockchain alternatives outside of Ethereum.

In the past 24 hours, crypto futures worth more than $812 million have been liquidated as bitcoin broke its $46,000 support level and fell to $43,000, according to data from Coinglass.

Separately, a record $14 billion in cryptocurrency was stolen in 2021, thanks to the rise of decentralized finance (DeFi) platforms, according to new data from blockchain analytics firm Chainalysis, marking a 79% from a year earlier.

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3 – Federal Reserve Hints at Faster Pace of Rate Increases

The Federal Reserve at its December meeting began discussing plans to reduce the amount of bonds on its balance sheet, with Federal Open Market Committee members saying that a reduction in the central bank’s bond holdings will begin sometime after it begins raising interest rates, according to minutes released Wednesday.

While officials did not say when the Fed will start rolling off the nearly $8.3 trillion in Treasurys and mortgage-backed securities it is currently holding, minutes from the meeting indicated the process could begin within the next several months.

Can the Federal Reserve Stop Inflation?

“Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” the meeting summary stated.

Market expectations currently are for the Fed to start raising its benchmark interest rate in March, which would mean that balance sheet reduction could start before summer.

The minutes also indicated that once the process begins, “the appropriate pace of balance sheet runoff would likely be faster than it was during the previous normalization episode” in October 2017.

4 -- Nike Sues Lululemon Over Mirror Patent Infringement

Nike  (NKE) - Get NIKE, Inc. Class B Report on Wednesday filed a lawsuit alleging Lululemon’s  (LULU) - Get Lululemon Athletica Inc Report Mirror home-fitness device and applications infringe on the sneaker company’s portfolio of patents.

Nike says the Mirror Home Gym and apps use technology that the sneaker giant invented and patented, including a device that prompts users to exercise, monitors their heart rate and collects data on their activity, among other functions, according to the lawsuit, filed in the Southern District of New York. The lawsuit was first reported by the Wall Street Journal.

Just Buy It: Nike Is Best 2022 Idea at Guggenheim

Nike said it sent a notice to Vancouver-based Lululemon on Nov. 3, citing a list of patents it owned that were allegedly being used by the Mirror device and its apps. A response from Lululemon’s lawyer, filed as an exhibit by Nike, said that after reviewing Nike’s letter the company didn’t believe that the Mirror or its apps were infringing on the patents.

Nike didn’t immediately respond to a request for comment.

5 -- BMW Unveils New Color-Changing Car

The painstaking decision of deciding what color your new car or truck should be could one day be a thing of the past.

In one of the most talked-about moments at CES 2022, German car maker BMW  (BMW)  on Wednesday unveiled color-changing paint technology that can have drivers change the color of their car with the push of a button.

E-ink, the same digital paper technology used in e-readers like Kindle or Kobo, is wrapped around the car to make it go from black to white to and back again.

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"A white surface reflects a lot more sunlight than a black one," BMW said in a press statement. "By implication, heating of the vehicle and passenger compartment as a result of strong sunlight and high outside temperatures can be reduced by changing the exterior to a light color.”

"This concept car with BMW is an amazing display of how surfaces of the future will transform to personalize, customize and provide information," Tim O'Malley, AVP for BMW's US Regional Business Unit, said.