S&P 500 Falls as $5.3 Trillion Options Test Looms: Markets Wrap

(Bloomberg) — The stock market fell as big tech sold off and a pile of options expiring Friday threatened to trigger sudden price swings.

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Wall Street traders are bracing for a quarterly episode ominously known as triple witching in which derivatives contracts tied to stocks, index options and futures are scheduled to mature — compelling traders en masse to roll over their existing positions or to start new ones. About $5.3 trillion are set to expire this time, according to Rocky Fishman, founder of derivatives analytical firm Asym 500.

“It’s a day in which the direction of the market is very, very difficult to predict,” said Matt Maley at Miller Tabak. “On these big expiration days, the ‘internals’ get so skewed by the expiration that they don’t tell us anything. Therefore, it will be important that investors don’t use today’s action when trying to decipher what is going to happen in the marketplace next week and beyond.”

The options episode comes at a critical juncture for markets positioning for next week’s Federal Reserve policy meeting. A recent pickup in inflation isn’t likely to shift policymakers’ forecasts for three interest-rate cuts this year and four in 2025, according to economists surveyed by Bloomberg News.

The S&P 500 dropped to around 5,120, led by losses in its most-influential group: technology. The Nasdaq 100 fell about 1%. Nvidia Corp. was set to halt a streak of nine straight weekly gains. Adobe Inc. tumbled 13% on a weak sales outlook. Treasury 10-year yields rose two basis points to 4.31%. The dollar fluctuated.

Corporate Highlights:

• Adobe Inc. gave a weak sales outlook for the current quarter, fueling concerns that new AI startups are a competitive threat.

• Nippon Steel Corp. said it’s determined to complete its $14.1 billion acquisition of United States Steel Corp., even after President Joe Biden stated the company should stay in US hands.

• United Airlines Holdings Inc. is close to securing three dozen or more Airbus A321neo jets from aircraft lessors as it looks to replace Boeing Co. 737 Max 10 orders that are at least five years behind schedule, according to people familiar with the matter.

• Qatar Airways is in early talks with Boeing Co. and Airbus SE to order as many as 150 widebody jets and renew its fleet of aging long-distance aircraft, according to people familiar with the matter.

• Madrigal Pharmaceuticals Inc.’s drug Rezdiffra gained the first US approval to treat a potentially deadly liver disease that affects millions worldwide, succeeding in an area where some bigger rivals have failed.

• Vodafone Group Plc’s €8 billion ($8.7 billion) deal to sell its Italian business to Swisscom AG marks the completion of Chief Executive Officer Margherita Della Valle’s European transformation plans for the telecommunications company, and promises to shake up the fiercely competitive Italian market.

Story continues

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.6% as of 9:49 a.m. New York time

• The Nasdaq 100 fell 0.9%

• The Dow Jones Industrial Average fell 0.3%

• The Stoxx Europe 600 was little changed

• The MSCI World index fell 0.5%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro was little changed at $1.0885

• The British pound was little changed at $1.2746

• The Japanese yen fell 0.4% to 148.90 per dollar

Cryptocurrencies

• Bitcoin fell 3.3% to $68,367.35

• Ether fell 3.1% to $3,720.95

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.31%

• Germany’s 10-year yield advanced two basis points to 2.44%

• Britain’s 10-year yield advanced three basis points to 4.12%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Lu Wang.

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