The S&P 500 held flat near 7,641 points on Friday, capping a week marked by the Federal Reserve's first rate hike in more than three years and a bond-market selloff. Treasury yields resumed climbing as quadruple witching added to volatility, leaving the index about 2% below its record close.
At 15:28 ET, the S&P 500 traded little changed at 7,641.00 points, while the Nasdaq Composite gained 0.2% to 26,474.62 and the Dow Jones Industrial Average slipped 0.2% to 51,698.39. The moves came a day after Wall Street's best session in over a month.
Fed's rate hike lifts yields
The Federal Reserve on Wednesday raised the federal funds rate to 3.75%-4.00% from 3.50%-3.75%, a unanimous move that traders had priced with a 90% probability. Fed Chair Kevin Warsh's press conference and the updated Summary of Economic Projections came across as hawkish. Stocks rallied Thursday as investors read the hike as a sign the Fed remained committed to fighting inflation.
However, that relief faded by Friday, when the 10-year Treasury yield rose 6.1 basis points to 5.008%, after touching an over 19-year high earlier in the week.
Quadruple witching adds volatility
Friday also brought quadruple witching, the quarterly expiration of stock index futures, stock index options, stock options and single-stock futures that falls in March, June, September and December. According to Rick Gardner, chief investment officer at RGA Investments: “quadruple witching is known to bring volatility to markets”, and he added that the effect could be sharper given the digestion period after Wednesday's rate hike.
S&P 500 still short of its record
The S&P 500 has fallen nearly 1% in September and sits about 2% below its last record close. Mark Luschini, chief investment strategist at Janney Montgomery Scott, said earnings season remains a few weeks away and the Fed decision is no longer a catalyst for a fresh push higher. He pointed to a possible détente with Iran that could ease oil prices as another potential spark for new highs.
Source: Investing.com
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