The U.S. stock market saw increased volatility and a decline in response to a $4 trillion options event, alongside concerns about a strike impacting Detroit automakers. Big tech companies like Nvidia led the losses, with the S&P 500 erasing gains for the week and the Nasdaq 100 dropping nearly 2% on Friday. Chipmakers were affected by news that Taiwan Semiconductor Manufacturing Co. requested delays in highend equipment shipments. The VIX volatility index climbed, and the S&P 500 and Nasdaq Index closed -0.16% and -0.39% respectively for the week.
Investors are showing a preference for longer-term bonds, anticipating that the Federal Reserve is nearing the end of its interest-rate hiking cycle. Yields on longer-dated debt are attractive, even if the Fed continues to raise rates. The scarcity of long-duration offerings has created a premium on such bonds. This trend has led to strong demand for longer-maturity bonds, particularly from insurance and pension investors. Government 10yr yields in both Canada and the U.S. ended the week slightly higher.
Oil prices increased for the third consecutive week due to production cuts by Saudi Arabia and Russia, tightening the global oil market. Oil settled near $91 a barrel, the highest since November. The International Energy Agency and OPEC warned of a market deficit through the end of the year, driving prices up by about 4% for the week.