(Bloomberg) — Stocks soared higher as Nvidia Corp. nearly reversed an earlier plunge, with a stack of options expiring on Friday threatening to trigger sudden price swings.
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Wall Street is facing a quarterly episode ominously known as “triple witching,” in which derivatives contracts tied to stocks, index options and futures mature – forcing traders en masse to roll over existing positions or start new ones. About $5.5 trillion will expire on Friday, according to an estimate from options platform SpotGamma. The expiration also coincides with the rebalancing of the index.
The S&P 500’s trading volume was 70% above its average over the past month. Nvidia fell marginally after falling about 5% earlier in the session. The value of contracts linked to the chipmaker expiring on Friday is the second largest of all underlying assets, trailing only the benchmark.
The St. Louis Fed’s GDP model projects US growth of 0.8% in the second quarter of 2024
The options event comes at a crucial time for the market positioning for the second half of 2024 and the Federal Reserve’s next steps. Data showed that activity in the US services sector picked up early this month to the fastest pace in more than two years. In addition, sales of existing homes fell for the third month in a row.
“Investors should brace for drama,” said Solita Marcelli of UBS Global Wealth Management. “The second half of 2024 will be a time of transition and volatility. The decisions investors make now will be crucial to effectively weather this period.”
The ongoing AI frenzy that briefly made Nvidia the world’s most valuable company this week also fueled record inflows into technology funds, Bank of America Corp. strategists said. About $8.7 billion flowed into technology funds in the week to June 19, according to a note from the bank citing EPFR Global data.
“All roads lead to Nvidia” business is strengthening again” as Europe reels amid political turmoil in France, strategist Michael Hartnett said. While investors still feel they need more exposure to AI-related activities, “all asset allocators are concerned about the risk of stock concentration,” Hartnett said.
Business highlights:
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Airbus SE is moving closer to an agreement with Spirit AeroSystems Holdings Inc. to take over parts of the aerospace supplier’s operations, paving the way for a takeover of most of the company by archrival Boeing Co. already next week.
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American Airlines Group Inc. is suspending training for new pilots until the end of this year, the latest withdrawal by a major U.S. airline in the face of uneven travel demand and delayed planes.
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A top U.S. Food and Drug Administration official ignored reviewers by giving broad approval to Sarepta Therapeutics Inc.’s gene therapy. for a rare childhood muscle disease, despite a lack of data showing that it actually slows the overall progression of the disease.
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Carlsberg AS said it is weighing its options after Britvic Plc rejected unsolicited takeover bids, valuing the British soft drinks maker at as much as £3.1 billion ($3.9 billion).
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Prime Minister Justin Trudeau’s government is preparing possible new tariffs on Chinese electric vehicles to bring Canada in line with actions by the U.S. and the European Union, according to people familiar with the matter.
Some of the major moves in the markets:
Shares
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The S&P 500 was little changed at 12:05 a.m. New York time
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The Nasdaq 100 rose 0.2%
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The Dow Jones Industrial Average was little changed
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The Stoxx Europe 600 fell 0.7%
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The MSCI World Index fell 0.2%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0693
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The British pound fell 0.2% to $1.2638
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The Japanese yen fell 0.4% to 159.49 per dollar
Cryptocurrencies
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Bitcoin fell 2.2% to $63,615.13
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Ether fell 1.2% to $3,481.04
Bonds
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The yield on ten-year government bonds rose by one basis point to 4.27%
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The German ten-year yield fell by two basis points to 2.41%
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The British ten-year yield rose by three basis points to 4.08%
Raw materials
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West Texas Intermediate crude fell 0.2% to $81.09 a barrel
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Spot gold fell 1.4% to $2,327.89 an ounce
This story was produced with the help of Bloomberg Automation.
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