In the first half of the trading session on Friday, September 17, the US stock market declined on the eve of the expiration of quarterly options and stock futures.
Goldman Sachs estimates the expiration of quarterly stock options at $3.4 trillion, which could be a record value for any September in history. In addition, the yield on 10-year US government bonds rose to a record high since mid-July, and preliminary data on US consumer confidence for September fell short of forecast estimates and remained in the area of record low values for the last ten years.
S&P 500, the global stock market as a whole, has every chance to close with a decline the second week in a row, which is the reason.
Shares remain overbought and overvalued by historical standards, the epidemiological situation in the world is not improving, and macroeconomic statistics for the United States and China has matured its own Lehman Brothers in the face of developer China Evergrande with debts of over $300 billion.
Inflation in the US remains elevated, which means a more or less imminent reduction in the asset purchase program, which the Fed may hint at as early as next Wednesday, September 22.
As a result, we see a typical picture for September, which is historically the weakest month of the year for the US stock market. In addition, recently, the S&P 500 has tended to decline on the eve of the expiration of monthly options, and today the quarterly end will take place.
Goldman Sachs estimates the end of quarterly stock options at $3.4 trillion ($700 billion of options on individual issuers + $2.7 trillion of stock index options), which could be a record value for any September in history. Probably, this event will determine the current dynamics of the US stock market. At the beginning of the week, Nomura quants predicted that the S&P 500 could reach 4,400 or 4,500 points at the time of expiration.
The consumer sentiment index from the University of Michigan previously rose in September by 0.7 p. to 71p. (against the consensus forecast at 72.0 p.) and remained in the area of the lowest values for the last ten years.
Due to high inflation, the subindex of conditions for purchasing durable goods, houses, and vehicles fell to the lowest levels since 1980. American consumers expect that the rate of inflation growth will be 4.7% in the coming year, which is the highest value since 2008.
ECB Governing Council member Martins Kazaks said in an interview with Bloomberg that inflation in the Eurozone might exceed forecasts if the pandemic does not provoke new shocks.
The components of the S&P 500 showed fragile dynamics: all 11 main sectors of the index declined. Materials manufacturers (-2.2%), IT (-1.5%) and industrial companies (-1%) looked the worst.
19% of the S&P 500 component stocks were growing, and 81% were getting cheaper.
