Stocks fell, with a massive options event exacerbating volatility and traders weighing the effects of a strike that hit Detroit automakers while sifting through economic data ahead of the Fed decision.
Nvidia and Meta Platforms led the losses on Friday, with both down more than 3.5%. The S&P 500 lost this week's gains, while the Nasdaq 100 fell nearly 2%. A chipmaker index fell following news that Taiwan Semiconductor Manufacturing had asked major suppliers to delay shipment of high-end equipment. Ford Motor Company and General Motors whipsawed. Treasury yields increased. The dollar had not changed much.
The VIX, Wall Street's widely followed equity volatility index, has risen from its lowest level since 2020.
Thousands of derivatives contracts tied to stocks, index options, and futures contracts expired on Friday, forcing traders to roll over existing positions or open new ones. This time, it coincided with the rebalancing of benchmark indexes such as the S&P 500, which was another catalyst for increased share trading.
Inflation expectations in the United States fell to their lowest level in more than two years as consumers became more optimistic about the economy. Nonetheless, sentiment fell to 67.7, which was lower than the median estimate in a Bloomberg survey of economists. A measure of factory activity in New York state unexpectedly increased due to new orders. Factory output barely increased in August, hampered by a drop in motor vehicle output.
According to economists, a resilient US economy will prompt the Fed to hike interest rates one more time this year and keep them at their current levels for a longer period of time next year than previously anticipated.