Nasdaq, S&P 500 Futures Sink Amid Economic Uncertainty — Volatility Anticipated Ahead Of Options Expiry

Zinger Key Points
  • Wall Street looks set to close out a lackluster trading week on a down note
  • Volatility associated with options expiry has made it difficult to predict the course of the market on Friday
  • Louis Navellier recommends investing in companies with demonstrated continued earnings growth

Wall Street looks set for a markedly negative open on Friday, as reflected by the trading in the U.S. index futures.

This follows a lackluster trading session on Thursday when the major averages opened slightly lower but recovered to stay mostly afloat before closing modestly higher. Investors were reacting to mixed data points on jobless claims and the housing market. Conflicting data is likely to keep investors on tenterhooks regarding the course of monetary policy in the near term.

The 30-stock Dow Industrials index was down an insignificant 0.06% at the close, recouping some of the past session’s losses. The S&P 500 and the Nasdaq Composite indices lost around 0.20% each before settling at 4,283.74 and12,965.34, respectively.

It remains to be seen if the S&P 500 can keep its four-week winning streak going.

A the time of going to press on Friday, the Nasdaq 100 futures are down 0.91%, while the S&P and Dow futures have slid 0.79% and 0.64%, respectively.

Heavy volatility could be the order of the day on Friday, when $2 trillion worth of options are set to expire, Goldman Sachs analyst Rocky Fishman said, according to Bloomberg. This would require options holders to either roll over existing positions or start new positions.

Fund manager Louis Navellier said in a recent report the monetary policy outlook leaves the market in a position where “reports of economic strength are seen as giving the Fed more room to increase rates aggressively without concerns of triggering a serious recession.”

“Strong earners with reasonable P/Es which pull back on market dips should be bought, weak earners with outsized P/Es should be trimmed on market rallies,” he wrote.

He recommends putting money to work and shifting the mix to stocks of companies, which have “demonstrated continued earnings growth in the current inflationary economy.”

See Also: Is The Bear Market Over? What To Watch On The SPY As The Market ETF Bumps Into Major Bull, Bear Indicator

The economic calendar of the day is pretty light, with no market-moving data on tap.

Farm equipment and heavy machinery manufacturer Deere & Company DE is scheduled to release its third-quarter earnings ahead of the market open.

Energy stocks could come under pressure as crude oil futures are retreating sharply after a two-session run.

Meme stock Bed Bath & Beyond, Inc. BBBY is taking a tumble after Ryan Cohen liquidated the 11% stake he built up in the retailer.

Asian stocks closed Friday’s session mostly lower, as investors in the region digested the cues from Wall Street. The European markets are mostly lower, reversing from the previous session’s gains. The United Kingdom's FTSE 100 Index is bucking the trend, although with a marginal gain. Producer price inflation report from Germany showing record wholesale price inflation is impacting sentiment.

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY was slipping 1.05% to $427.89 and the Invesco QQQ Trust QQQ was moving down 1.14% to $325.5, according to Benzinga Pro data.

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Posted In: EarningsNewsFuturesPreviewsSmall CapTop StoriesEconomicsPre-Market OutlookMarketsTrading IdeasNasdaq Composite IndexS&P 500 Index
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