It was another red day on Wall Street, after several days of decline. It was heaviest for technology-heavy Nasdaq, while the S&P 500 and Dow Jones followed suit.
The S&P 500 closed down 0.82 percent to 28,139.56 point.
The Nasdaq Composite fell 1.27 percent to 11,313.13 point.
The Dow Jones shrank 0.54 percent to 28,139.56 point.
Unusual option trading may have driven the rally
On Friday night, it was reported in several American media that SoftBank, through its investment fund, has driven up the market in recent months through giant sums in call options. Call options give the owner a right, but not an obligation, to buy a share at a given price within a predetermined time.
Analysts now report that the unusual activity in the options market may have contributed to the unusual rally and turnover in the stock market in recent months. They also claim that this activity may have made the market very vulnerable to possible falls, as we have seen towards the end of the week.
CNBC writes that the unusual rally, where the VIX index (fear index) and the stock market have risen at the same time, can be explained by investors’ analysis of the abnormally high turnover in the options market.
The Wall Street Journal wrote on Thursday that public records show how the fund has invested close to 4 billion dollars in technology stocks during the spring. This then does not include the massive sums that were placed in options.
Job numbers in focus
The development on Wall Street is taking place despite the fact that what is referred to as “the most important number of the month” surprised positively on Friday.
The number of non-farm payrolls in the United States rose by 1,371 million in August. The unemployment rate was 8.4 percent.
According to TDN Direkt, the number of employees was expected to increase by 1.4 million, while the unemployment rate was expected to be 9.8 per cent.
“Doubts about the sustainability of valuations in the technology sector, a stretched patience with new support packages and lack of support in the updates of both the ISM index and unemployment sent risk appetite down in the US stock market yesterday,” wrote Ole-Andreas Krohn in Friday’s report from DNB Markets.
Fear, gold, oil and interest
The VIX index, popularly called the fear index, fell 9.64 percent to 30.36.
The gold price was down 1.5 percent and one ounce went at closing time for 1,943.40 dollars.
North Sea oil fell 3.63 percent to $ 42.47 a barrel.
The 3-month interest rate rose marginally by 2.7 basis points to 0.113 per cent.
The interest rate on the 2-year-old accumulated 1.6 basis points to 0.149 per cent.
The 10-year interest rate rose by 7.8 basis points to 0.717 per cent.
The 30-year interest rate rose by 10.1 basis points to 1.465 per cent.
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