US stocks open lower as traders brace for volatility amid monthly options expiration

US stocks traded lower on Friday with more than $2 trillion worth of stock-related options expiring, while investors digested more hawkish comments from the Federal Reserve.

How are stock index futures traded?
  • Dow Jones Industrial Average DJIA,
    -0.86%
    It fell 265 points, or 0.8%, to 33,729 points.

  • S&P 500 SPX Index,
    -1.34%
    It fell 48 points, or 1.1%, to 4,234.

  • The Nasdaq Composite Index fell 223 points, or 1.7%, to 12,743 points.

on me ThursdayS&P 500 SPX,
-1.34%
The Dow Jones Industrial Average rose 0.2% to 4,283.74,
-0.86%
It rose less than 0.1% to close at 33999.04 and Nasdaq Composite COMP,
-2.08%
It gained 0.2% to end at 12965.34.

What is driving the markets?

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

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Treasury yields rose on Friday as investors returned to the view that the Fed’s big rate hikes are not over yet, with the 10-year TMUBMUSD10Y yield,
2.988%
5 basis points increase to 2.913% and TMUBMUSD02Y for 2 years,
3.259%
It rose 3 basis points to 3.238%.

Interest rate-sensitive technology stocks seemed poised to take the brunt, with the Nasdaq leading the market lower. The tech-heavy index was headed for a weekly decline of 0.6%, while the S&P 500 is clinging to positive territory, after both indexes finished last week with a fourth straight win, their longest weekly streak since November 2021.

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Meanwhile, investors are also assessing the growing possibility that the Federal Reserve will raise interest rates by 75 basis points at its September meeting.

St. Louis Federal Reserve Chairman James Bullard He told the Wall Street Journal Jajar On Thursday it will “tend towards” a 75 basis point hike in September. Investors also heard more cautious comments from Kansas City Fed President Esther George, who said how the rapid rallies would occur is still being discussed.

Speaking Friday morning, Richmond Fed President Tom Barkin said that while the Fed would “do what it takes” to push inflation toward its 2% target, “a return to normal does not require a catastrophic decline in economic activity.” “.

Opinion: The Fed isn’t cold about wrestling inflation on the floor, so stop misreading its minutes

Now that US retail traders are finished reporting second-quarter earnings, investors are turning their focus toward what Federal Reserve Chairman Jerome Powell will say during the Federal Reserve’s annual economic seminar in Jackson Hole, U.S. next week.

“I think everyone is waiting for Jackson Hole, so I think there will be a lot of speculation about what Powell will say for the next five days,” said Brad Conger, deputy chief investment officer at Pennsylvania-based Hirtle Callaghan, which oversees about $20 billion in assets. Most of them are on behalf of the university endowments.

The picture of economic data this week was mixed, with retail sales flat, while Wall Street received disappointing results from Target TGT,
-2.28%
and Kohl’s KSS,
-3.64%.
But Thursday brought in data showing weekly jobless claims fell by 2,000 to 250,000, with no sign of mass layoffs.

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What companies are focused on?
How are other assets traded?
  • Crude oil prices fell in parallel with stock futures. WTI CL.1,
    + 0.53%
    For the month of September, it fell 6 cents, or 0.1%, to $90.05 a barrel, while Brent was down BRN00,
    + 0.22%
    It fell 42 cents, or 0.4 percent, to $96.29 a barrel.

  • DXY US Dollar Index,
    + 0.66%
    It rose 0.5% to 107.98 as investors sought safe haven assets.

  • Gold prices fell, with the December futures contract for the precious metal GCZ22,
    -0.58%
    It fell $7.70, or 0.4%, to $1,763.30 an ounce.

  • Bitcoin BTCUSD,
    -8.78%
    It fell 8% to $21,440 and was I headed to what could be the biggest loss in two months.

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