U.S. stocks ended lower on Friday, 17^th December 2021, and for the week after some volatile trading. 

A surge in the Omicron covid variant and concerns of higher interest rates weighed on the market. 

Friday was also triple witching day, where quarterly single stock options, single stock futures, stock index options all expire on the same day. 

At the same time, the trading volume was heavy on the back of these expiries, which caused the volatility that we saw. 

After a roller-coaster week, the benchmark 10-year U.S. Treasury note dropped to its lowest yield in two weeks at 1.407%.  

For the week, the Dow booked a 1.7% decline, the S&P 500 lost 1.9% and the Nasdaq Composite finished with a weekly drop of 3%. 

Here are the closing levels on Friday: – 

	Last	Change	%Change
Dow Jones	35,365.44	-532.2	-1.48%
S&P 500	4620.64	-48.03	-1.03%
Nasdaq Comp	15169.68	-10.75	-0.07%
US 10Y	1.407%
VIX	21.57	+1.00	+4.86%

What can we take away from last week’s price movements? 

For one, the markets are volatile.  

Heading into the holidays and the year-end with liquidity in question might only add to more volatile sessions. 

The Fed’s intention or dot plot for more hikes than the market anticipated has brought up some doubts on the sustainability of stocks prices remaining high.

During this interval, tech stocks are taking the brunt of the selling as it affects forward valuations. 

Then, there is omicron. While indications show that the variant is milder in terms of potency, the fact that it spreads quickly is going to make countries consider partial lockdowns or worse. 

On the other hand, the buyers on dips did come in earlier in the week but were punished this time. I suspect that they are still waiting in the wings and won’t rule them out just yet. 

However, like I said last week, year-end is closing and people booking profits may render prices lower. So, it is best to be cautious. 

With Christmas approaching, I would like to wish everyone a Merry and Blessed Christmas. 

I will not be writing a commentary next Monday, 27^th December 2021, as I will be celebrating Christmas. 

As my next issue will be on Monday,3^rd January 2022, let me take this opportunity to also wish you a Happy New Year! 

God Bless! 

Source: CBOE, Reuters, Bloomberg  

This commentary is written by James Gomes 
James has been in the finance industry for over 30 years and most recently worked for a large U.S. bank for more than 20 years. 

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