Stocks

U.S. stock futures struggle as options expiries loom and S&P 500 fights to hold on to a weekly gain

U.S. stock futures pointed to a softer start for Wall Street on Friday, as investors weighed up recent economic data and braced for potential volatility from simultaneous options expiries due later.

How are stock-index futures trading?

On Thursday, the Dow industrials
DJIA,
-0.18%

closed down 63.07 points, or 0.2%, to 34,751.32, the S&P 500
SPX,
-0.16%

ended down 6.95 points, or 0.2%, to 4,473.75, while the Nasdaq Composite
COMP,
+0.13%

rose 20.39 points, or 0.1%, to finish at 15,181.92.

What’s driving the market?

A week of seesaw trading has left all three major indexes with gains of around 0.4% or slightly less for the week through Thursday. Some of that volatility may be blamed on the run-up to Friday’s “quadruple witching,” the simultaneous expiration of individual stock options, stock-index options, stock-index futures and single-stock futures.

The pause in stock futures also came a day after data showing stronger-than-expected retail sales, but a jump in weekly jobless claims, all ahead of next week’s two-day Federal Open Market Committee policy meeting.

“Market sentiment is mixed, as investors don’t know what to do with the latest economic data and their Federal Reserve (Fed) expectations these days,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “Stronger-than-expected data seemed to have fueled Fed tapering expectations rather than the bulls’ appetite.”

And: Fed interest rate hike outlook due next week carries risk of hawkish surprise

Read: When the Fed finally steps back, can the U.S. stock and bond markets stand on their own legs?

A busy week of data included softer-than-expected consumer prices on Tuesday, which left both the Dow and S&P 500 lower, as investors fretted that underlying price pressures may not ease up.

And while While Street firms have expressed nervousness as stocks grind higher, Ozkardeskaya said a correction is being prevented by “the fear of missing out a further rally in equities, the so-called FOMO, and the fact that there is no alternative, the so-called TINA.”

While the U.S. 10-year yield is now above 1.30%, an advance to 2% that many forecast earlier this year has yet to happen, the analyst said, adding that “the high inflationary pressures leave investors with no place to go but the equities. Therefore, the U.S. indices will continue claiming new highs in the coming sessions.”

Read: Will high inflation kill the bull market in stocks? History says probably not

Friday’s data will include the University of Michigan’s consumer sentiment index at 10 a.m. Eastern Time.

On the COVID front, a group of independent advisers to the U.S. Food and Drug Administration will meet on Friday to review and vote on whether vaccinated Americans should get booster shots. While companies such as Pfizer Inc.
PFE,
-0.67%

and Moderna Inc.
MRNA,
+1.42%

say the boosters are needed, scientists have cited a lack of evidence to support that rollout.

Which companies are in focus?
  • Shares of Invesco
    IVZ,
    -2.58%

    were up 6% in premarket trading after The Wall Street Journal, citing sources, reported that the investment management group is in merger talks with State Street Corp.’s
    STT,
    -0.99%

    asset-management unit. State Street shares were unchanged.

How are other assets trading?
  • The yield on the 10-year Treasury
    TMUBMUSD10Y,
    1.341%

    note rose 1 basis point to 1.3371%.

  • The ICE U.S. Dollar Index
    DXY,
    -0.13%
    ,
    a measure of the currency against a basket of six major rivals, slipped 0.1% to 92.812.

  • Oil futures continued to retreat from a seven-week high, with the U.S. benchmark
    CL00,
    -0.90%

    down 0.8% to $71.97 a barrel. Gold futures
    GC00,
    +0.51%

    rose 0.6%, or $9.80, to $1,766.50 an ounce.

  • In European equities, the Stoxx Europe 600 index
    SXXP,
    -0.08%

    rose 0.3% and the FTSE 100
    UKX,
    -0.08%

    rose 0.1%.

  • In Asia, the Shanghai Composite
    SHCOMP,
    +0.19%

    rose 0.1%, Hong Kong’s Hang Seng Index
    HSI,
    +1.03%

    gained 1% and the Japan’s Nikkei 225 index
    NIK,
    +0.58%

    rose 0.5%.

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