The stock market took a hit as big tech companies experienced a sell-off and a significant number of options were set to expire on Friday, potentially leading to sudden price swings. Traders are preparing for what is known as triple witching, a quarterly event where derivatives contracts tied to stocks, index options, and futures are set to mature, forcing traders to adjust their positions.
With approximately $5.3 trillion in options set to expire, the market direction is uncertain. Matt Maley at Miller Tabak warned that the market’s behavior on this day may not accurately reflect future trends. This options expiration comes at a crucial time as investors are gearing up for the Federal Reserve policy meeting next week.
Despite a recent uptick in inflation, economists surveyed by Bloomberg News do not expect it to alter the Fed’s forecast for interest rate cuts. The S&P 500 and Nasdaq 100 both saw declines, with trading volume significantly higher than usual. Adobe Inc. suffered from a weak sales outlook, while Nvidia Corp. experienced volatility.
Florian Ielpo at Lombard Odier Asset Management noted the confusion in the market this week, with investors focusing on inflation rather than the unexpected slowdown in the US economy. Barclays Plc strategists warned that if the Fed signals fewer rate cuts than expected, the equity market rally could falter.
In corporate news, Nippon Steel Corp. remains committed to acquiring United States Steel Corp., despite President Joe Biden’s preference for the company to stay in US hands. JD.com Inc. and Elliott Investment Management both decided against making offers for Currys Plc. Binance Holdings Ltd. tightened requirements for listing new digital tokens, while Boeing Co. issued a safety message to operators of the 787 jetliner following an in-flight incident.
United Airlines Holdings Inc. is reportedly close to securing Airbus A321neo jets to replace delayed Boeing Co. 737 Max 10 orders. Madrigal Pharmaceuticals Inc. received US approval for its drug Rezdiffra to treat a deadly liver disease, while Reckitt Benckiser Group Plc faced a $60 million damages award over its Enfamil baby formula.
Overall, the market remains uncertain as investors await the Fed’s decision next week. The story continues to unfold as traders navigate through the options expiration and potential market shifts.
