US stocks fall, volatility rises

   2023-09-15 18:09

Shares dropped on Wall Street’s final session of the week. After surging 25 per cent on its trading debut the previous session, Arm Holdings fell 4.5 per cent amid the broad sell-off in New York.

Oanda’s Edward Moya said there were a raft of headwinds, including nervousness “over how long the UAW strike will last, concerns the AI trade was too optimistically priced in, and on today’s $US4 trillion triple witching options event”.

  • On Wall St: Dow -0.8% S&P -1.2% Nasdaq -1.6%
  • In New York: BHP +0.1% Rio -0.3% Atlassian -3%
  • Tesla -0.6% Apple -0.4% Amazon -3% Meta -3.7%

“Nothing screams ‘bear market in conviction’ more than money market funds seeing $US1 trillion of inflows year-to-date,” Bank of America investment strategist Michael Hartnett said in a note.

“We think markets may rally into [the] first negative [US] payroll print but this likely followed by slump on second negative payroll print.”

In the latest weekly flow report, however, investors showed that there’s no consensus yet.


The funds data tracked by BofA showed that $US25.3 billion flowed into global stocks in the week through September 13, the most since March 2022; $US26.4 billion flowed into US equities alone. Mr Hartnett said it was a sign that “confidence in a soft landing” was rising.

ASX futures were down 41 points or 0.56% to 7250 near 7am AEST.

The local currency edged lower; the Bloomberg dollar spot index was little changed.

On, bitcoin was 0.7 per cent lower to $US26,431 at 7.05am AEST.

The yield on the US 10-year note rose 5 basis points to 4.33 per cent at 4.59pm in New York.

Mohamed El-Erian is warning that a swath of corporations will be hurt by higher interest rates when they have to refinance next year.


“If you look at high yield, if you look at commercial real estate, there’s massive refinancing needs next year. Massive,” he said on Bloomberg Television Friday. “So that’s the point of pain which starts to happen.”

After sliding near 5 per cent on Thursday in New York, to its lowest close since mid-January 2020, the VIX surged on Friday; it was 7.6 per cent higher to 13.79 at 3.15pm in Chicago.

All 11 S&P 500 sector indexes declined, led lower by information technology, down 2 per cent, followed by a 1.9 per cent loss in consumer discretionary.

For the week, the S&P 500 fell 0.2 per cent and the Nasdaq lost 0.4 per cent. The Dow added 0.1 per cent.

SoftBank’s Arm Holdings fell 4.5 per cent after a stellar Nasdaq debut on Thursday.

Piles of derivatives contracts tied to stocks, index options and futures are expiring Friday, according to Bloomberg — compelling traders to roll over their existing positions or to start new ones. This time, it coincides with the rebalancing of benchmark indexes including the S&P 500, another catalyst for more share transactions.


“Options expiration forces people to adjust their positions, and this is an especially powerful expiration that can add fuel to market moves,” Callie Cox at eToro told Bloomberg. “This is especially prevalent in individual stocks, where trading in the shares and options can be thin. Brace for swings, but try not to tap out of this market until we see convincing evidence of a recession.”

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Markets rally with elusive soft landing in sight The ASX 200 closed Friday’s session up more than 100 points, its best one-day performance since January.

Why Chinese EVs are storming Australia The Australian new car market is rapidly turning Chinese and in the battery electric vehicle category they completely dominate.

Shorten: What would it take for the Qantas board to resign? While acknowledging the future of the airline’s board lay with shareholders, Labor cabinet minister Bill Shorten questioned if it should even get that far.

Fortescue executive was ‘very wise’ to quit, says rival mining boss Interim Newcrest chief Sherry Duhe has assured Christine Morris she did the right thing in leaving the miner after just two months.


Cash and bonds to beat equities and high-risk debt Elevated sharemarket valuations imply that future returns will be very poor.

Market highlights

ASX futures down 41 points or 0.56% to 7250 near 7am AEST

  • AUD -0.1% to 64.32 US cents
  • Bitcoin -0.7% to $US26,431 at 7.05am AEST
  • On Wall St: Dow -0.8% S&P -1.2% Nasdaq -1.6%
  • In New York: BHP +0.1% Rio -0.3% Atlassian -3%
  • Tesla -0.6% Apple -0.4% Amazon -3% Meta -3.7%
  • Stoxx 50 +0.4% FTSE +0.5% CAC +1% DAX +0.6%
  • Spot gold +0.7% to $US1923.91 at 4.59pm in New York
  • Brent crude +0.6% to $US94.27 a barrel
  • Iron ore +1.8% to $US122.85 a tonne
  • 10-year yields: US 4.33%, Australia 4.10%, Germany 2.67%
  • US price as of 4.59pm in New York

United States

Biden urges ‘record contracts’ after record auto sector profits The workers’ four-year contracts with General Motors, Ford Motor and Stellantis expired at midnight Thursday, with the two sides far apart.


Instacart plans to price IPO shares on Monday, trade Tuesday The grocery delivery business looks to tap into investor enthusiasm after Arm Holdings’ unexpectedly strong trading debut.

Nvidia cash geyser can cover buybacks and vital R&D Nvidia is projected to generate near $60 billion in free cash flow in its fiscal 2025 year.

Oxford Economics on the week ahead Fed policy meeting: “The Fed is widely expected to keep rates steady at next week’s meeting of the Federal Open Market Committee, so the focus will be on the message sent from the FOMC’s updated economic projections and chairman Jerome Powell’s post-meeting press briefing. We expect those signals to still have a hawkish tilt, although we think the Fed is done raising rates this cycle.”


European shares marked weekly gains on Friday, as better-than-expected Chinese data lifted luxury firms while investors took comfort from signs that the European Central Bank (ECB) is nearly done raising interest rates.


The pan-European STOXX 600 rose 0.2 per cent to close at a five-week-high, with luxury, mining and autos leading the sectoral gains.

French luxury names like Kering and LVMH climbed 1.8 per cent and 2.5 per cent after data showed China’s factory output and retail sales grew at a faster pace in August.

European stocks recorded their biggest percentage gain in six months on Thursday after the ECB raised its key interest rate to a record high of 4 per cent, but with the eurozone economy in the doldrums, signalled that the hike was likely to be its last.


Capital Economics: “We think the recent rally in the iron ore price will soon go into reverse. Steel demand in China has surged in recent months, but we think that will prove temporary. China’s steelmakers should cut back on production once the boost to demand from a pick-up in infrastructure spending passes.”

Bloomberg reported on Friday AEST that iron ore stockpiles at Chinese ports have fallen to their lowest in more than three years, according to data from Steelhome.

Output of steel products ramped up 11 per cent in August compared to a year earlier, signalling robust demand for iron ore.

Steel fundamentals are showing a seasonal pick up, with strong cost support and exports maintained while overall inventory levels are low, Huatai Futures said in a note.

Timothy Moore writes on monetary policy, equities, commodities and currencies. He is the overnight markets editor and writes Before the Bell. Connect with Timothy on Twitter. Email Timothy at [email protected]

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