Wall Street swung between losses and gains in volatile early trading yesterday, with only the defensive sectors staying higher consistently, highlighting concerns over slowing growth.
The markets opened higher and hit session highs after New York Federal Reserve President John Williams said the central bank is open to reassessing its views and listening to market signals that the economy could fall short of expectations. However, he said that, for now, further rate hikes appear appropriate.
His comments on CNBC come after the Fed said on Wednesday it would largely stick to its plan to keep raising interest rates, spooking investors already grappling with mounting evidence of slowing growth and triggering a two-day slide on Wall Street.
But the volatility was fuelled by ‘quadruple-witching’ – when options on stocks and indexes as well as futures on indexes and single-stocks for the quarter, all expire – which tends to raise volatility and trading volumes as investors replace expiring positions.
“We had a bit of a bounce, but it’s options expiration, so I don’t expect the market to regain any substantial strength from the recent sell-off,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Helping staunch the bleeding was Nike which jumped 7.85pc after the company’s quarterly results beat Wall Street estimates.
Adding to the nerves was the turmoil in Washington.
President Donald Trump threatened a “very long” government shutdown just hours ahead of a midnight deadline on a funding deal, while the resignation of US Defence Secretary Jim Mattis after falling out with Mr Trump also sparked concerns.
“A big problem is this chaotic administration. There is so much turmoil. It’s an ongoing political problem that creates uncertainties,” Mr Cardillo said. “Any rallies are not sustainable until we have capitulation, and so far we haven’t had that.”
In Dublin the Iseq index rose slightly, dragged higher by heavily weighted CRH which rose almost 2.5pc. News of a potential re-assessment by the Fed may have boosted the company which does a lot of business in the US. The Iseq closed up 0.28pc at 5391.42.