US Stocks Open Lower as Traders Brace for Volatility Amid Monthly Options Expiration

US stocks opened lower on Friday as traders braced for more volatility with more than $2 trillion in stock-linked option contracts set to expire.

How are stock index futures traded?
  • The Dow Jones Industrial Average DJIA,
    -0.83%
    it fell 134 points, or 0.4%, to 33,862.

  • The S&P 500SPX,
    -1.15%
    it fell 24.37 points, or 0.6%, to 4,259.

  • The Nasdaq Composite fell 126 points, or 1%, to 12,839.

In Thursdaythe S&P 500SPX,
-1.15%
rose 0.2% to 4,283.74, the Dow Industrials DJIA,
-0.83%
rose less than 0.1% to close at 33,999.04 and the Nasdaq Composite COMP,
-1.74%
it gained 0.2% to finish at 12,965.34.

What drives the markets?

Friday will be devoid of major US economic data, leaving investors to grapple with the monthly expiration of $2 trillion in stock and index options and comments from Federal Reserve officials.

Watch: Stock Market Rally Faces Key Challenge at S&P 500 200-Day Moving Average

Treasury yields rose on Friday as investors returned to thinking that the Fed’s big rate hikes were not over, with the 10-year yield TMUBMUSD10Y,
2.976%
up 5 basis points to 2.913% and the 2-year TMUBMUSD02Y,
3.259%
it rose 3 basis points to 3.238%.

Interest-rate sensitive tech stocks looked poised to bear the brunt, with the Nasdaq leading the market lower. The tech index was headed for a 0.6% weekly decline, while the S&P 500 clings to positive territory, after both indices ended last week with a fourth straight win, their longest weekly streak since November 2021. .

Investors, meanwhile, are also pricing in the growing likelihood that the Federal Reserve will raise interest rates by 75 basis points at its September meeting.

St. Louis Fed President James Bullard told The Wall Street Jeitherdaily on Thursday that it would “lean towards” a 75 basis point hike in September. Investors also heard more cautious comments from Kansas City Fed President Esther George, who said how quickly the hikes will happen remains a matter of debate.

Speaking Friday morning, Richmond Fed President Tom Barkin said that while the Fed will do whatever it takes to bring inflation back to its 2% target, “getting back to normal doesn’t require a calamitous drop in economic activity”.

Opinion: The Federal Reserve doesn’t shy away from fighting inflation to the ground, so stop misreading its minutes.

Now that US retailers have finished reporting second-quarter earnings, investors are shifting their focus to what Fed Chairman Jerome Powell will say at the Fed’s annual economic symposium in Jackson Hole, Wyoming, next week.

“I think the whole world is looking forward to Jackson Hole, so I think there’s going to be a lot of speculation about what Powell is going to say over the next five days,” said Brad Conger, deputy chief investment officer at Hirtle Callaghan & Co., which oversees some $20 billion. dollars in assets, mostly in the name of university donations.

The economic data picture this week was mixed as retail sales remained flat while Wall Street received disappointing results from Target TGT,
-2.01%
and Kohl’s KSS,
-4.50%.
But Thursday brought data showing weekly claims for jobless benefits fell from 2,000 to 250,000, with no sign of mass layoffs.

Which companies are in focus?
How are other assets traded?
  • Crude oil prices fell at the same pace as stock futures. West Texas Intermediate CL.1 crude,
    +0.19%
    for September fell 6 cents, or 0.1%, to $90.05 a barrel, while Brent BRN00,
    -0.28%
    it fell 42 cents, or 0.4%, to $96.29 a barrel.

  • The US dollar index DXY,
    +0.55%
    it rose 0.5% to 107.98 as investors sought haven assets.

  • Gold prices fell, with December futures for the precious metal GCZ22,
    -0.32%
    falling $7.70, or 0.4%, to $1,763.30 an ounce.

  • bitcoinbtc usd,
    -8.42%
    fell 8% to $21,440 and was was heading for what could be the biggest loss in two months.

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