(US) – On the final trading session of the week, Wall Street experienced a notable decline in shares. Arm Holdings, despite its impressive 25% surge during its trading debut the previous day, saw a 4.5% drop in value as part of the broader sell-off in New York.
Oanda’s Edward Moya pointed out several headwinds contributing to the market’s unease, including concerns about the duration of the UAW strike, doubts about whether the AI trade had been overly optimistic in its pricing, and the $4 trillion triple witching options event.
Bank of America’s investment strategist, Michael Hartnett, highlighted the unusual behavior of money market funds, noting that they have seen $1 trillion in inflows year-to-date, suggesting a lack of conviction in the current market sentiment.
Hartnett further speculated that while markets may rally after the first negative US payroll report, they could face a subsequent slump following the second negative payroll report.
Rally after negative payrolls, potential slump ahead
In the most recent weekly flow report, the lack of a consensus among investors was evident. BofA’s funds data indicated that $25.3 billion flowed into global stocks in the week ending September 13, the highest since March 2022, with $26.4 billion directed solely into US equities.
Hartnett suggested that this demonstrated growing confidence in a soft landing.
ASX futures dipped 41 points or 0.56% to 7250 near 7 am AEST, while the local currency experienced a slight decline. The Bloomberg dollar spot index remained relatively stable.
Bitcoin recorded a 0.7% decrease to $26,431 on bitstamp.net at 7:05 am AEST. The yield on the US 10-year note increased by 5 basis points to 4.33% at 4:59 pm in New York.
Mohamed El-Erian warned of potential challenges for a range of corporations next year when they need to refinance in the face of higher interest rates.
The VIX, which had fallen nearly 5% on Thursday to its lowest close since mid-January 2020, surged on Friday, recording a 7.6% increase to 13.79 at 3:15 pm in Chicago.
All 11 S&P 500 sector indexes saw declines, with information technology leading the drop with a 2% loss, followed by a 1.9% decline in consumer discretionary.
For the week, the S&P 500 experienced a 0.2% decline, while the Nasdaq lost 0.4%, and the Dow added 0.1%. SoftBank’s Arm Holdings saw a 4.5% decrease following its strong Nasdaq debut on Thursday.
A significant number of derivatives contracts tied to stocks, index options, and futures expired on Friday, coinciding with the rebalancing of benchmark indexes like the S&P 500, resulting in increased market activity. Traders were compelled to adjust or initiate new positions, potentially leading to market swings.