U.S. stock futures declined on Friday, ahead of the “Triple Witching” hour, which is expected to see the expiry of about $6.6 trillion options, for the quarter.
This comes after the market fell on Wednesday after the Federal Reserve’s hawkish cut and ended mixed on Thursday. In Friday’s premarket, all four major indices were trading lower.
The 10-year and two-year Treasury notes yielded 4.55% and 4.28%, respectively. The probability of having no change in the interest rates for the upcoming Jan. 31, 2025 decision was at 89.3%, according to CME Group’s FedWatch tool.
Investors will receive another critical economic data point on Friday with the release of the November personal consumption expenditures (PCE) inflation index. This release follows other inflation indicators that suggest price increases accelerated in November.
| Futures | Change (+/-) |
| Nasdaq 100 | -1.12% |
| S&P 500 | -0.78% |
| Dow Jones | -0.57% |
| Russell 2000 | -1.13% |
In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY was down 1.16% to $579.30 and the Invesco QQQ Trust ETF QQQ fell 1.23% to $507.83, according to Benzinga Pro data.
Cues From The Last Session
The S&P 500 ended the day essentially unchanged after giving up earlier gains. The Nasdaq 100 fell 0.5%, fluctuating between small gains and losses throughout the session.
However, Dow Jones ended marginally higher, breaking its 10-day losing streak.
Most sectors on the S&P 500 closed on a negative note, with materials, real estate, and energy stocks recording the biggest losses on Thursday. However, utilities and financials stocks bucked the overall market trend, closing the session higher.
Thursday’s economic data showed a revision upward in one of the Fed’s preferred inflation measures to 2.2%.
As Fed Chair Jerome Powell has indicated that further easing would require additional progress on inflation, market participants will now focus on the final significant economic data point of the year: November’s personal consumption expenditures, due out on Friday.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.10% | 19,372.77 |
| S&P 500 | -0.087% | 5,867.08 |
| Dow Jones | 0.036% | 42,342.24 |
| Russell 2000 | -0.45% | 2,221.50 |
Insights From Analysts
The “Triple Witching” hour is a quarterly event that occurs during the final hour of trade on the third Friday of March, June, September, and December. During this period, contracts for stock index futures, stock index options, and stock options all expire at the same time.
According to the Chairman and Founder of Navellier & Associates, Louis Navellier, “The timing of buying the dip is complicated by options expiration tomorrow and Christmas next week, but a recovery by the end of the year would not surprise anyone.”
He also said, “In my opinion, the stock and bond market reactions to the FOMC Statement, dot plot, and Fed Chairman Powell's press conference were grossly overdone and eviscerated all the stock market gains since the Presidential election.”
According to him, both France and Germany are in the midst of a political crisis and are "headless" until new leadership emerges. “As a result, I am expecting up to four Fed rate cuts in 2025 as collapsing interest rates in the eurozone also cause U.S. Treasury yields to decline,” he said.
However, Tom Lee, managing partner and head of research at Fundstrat Global Advisors, thinks fewer cuts are better for the economy.
"The fewer cuts [the Fed does] in 2025, it actually is better for this bull market because it provides a lot of future ammunition to protect the economy," he said.
"I know yesterday's (Wednesday’s) pullback was really painful, but to us, the fundamentals supporting stocks are intact.”
Carson Research’s vice president and global macro strategist, Sonu Varghese called 2024 a “strong” year for U.S. stocks, even with the recent pullback.
“The fallout from the Fed meeting wiped out post-election gains across large swaths of the market, including value stocks and mid-cap and small-cap stocks, though looking back over the entire year, almost every major category is up double-digits so far, across style (value – core – growth) and capitalization (large – mid – small). For comparison the MSCI All-Cap World ex US Net Index is up just 7.2% year to date. That should tell you how strong of a year 2024 has been for US stocks, even with the recent pullback,” Varghese said in a note.
See Also: How to Trade Futures
Upcoming Economic Data
Important data is slated to be released on Friday that will help investors to determine the future course of action.
- On Friday, personal income and spending data along with core and headline PCE index data for November will be released at 8:30 a.m., ET.
- Consumer sentiment data for December will be released at 10:00 a.m., ET.
Stocks In Focus:
- Psyence Biomedical Ltd. PBM was up 105% in premarket after it inked an IP licensing and mutual exclusivity agreement with Optimi Health Corp., a Canadian psychedelics pharmaceutical manufacturer.
- Humacyte Inc. HUMA was up 52.31% in premarket after it received FDA approval for SYMVESS, a bioengineered human tissue designed as a universally implantable vascular conduit for arterial injury treatment.
- Nike Inc. NKE was down 3.37% after issuing lower revenue guidance and additional gross margin pressure given the higher demand creation expenses.
- FedEx Corp. FDX was 7.33% higher after it posted stronger-than-expected results for its second quarter. The company also announced that it has decided to pursue a full separation of FedEx Freight through the capital markets, creating a new publicly traded company.
- BlackBerry Ltd. BB was down 5.03% as it expects fourth-quarter revenue in the range of $126 million to $135 million versus the estimates of $161.49 million.
- Winnebago Industries Inc. WGO was up 2.04% as analysts expect it to post quarterly earnings at 20 cents per share on revenue of $672.23 million before the opening bell.
- Carnival Corporation. CCL fell 1.11% as it is expected to report quarterly earnings at 8 cents per share on revenue of $5.93 billion before the opening bell.
Commodities, Bonds And Global Equity Markets:
Crude oil futures were lower in the early New York session by 2.75% to hover around $68.66 per barrel.
The gold spot index was up by 0.42% to $2,619.24 per ounce. The Dollar Index was down 0.16% to 108.239 level.
Asian markets declined on Friday, as Hong Kong’s Hang Seng, South Korea’s Kospi, Japan’s Nikkei 225, India’s S&P BSE Sensex, China’s CSI 300 and Australia’s ASX 200 index fell. Most European markets were also in the red in early trading.
Read Next:
Photo courtesy: Wikimedia
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
