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Wall Street retreated on Friday as tech stocks slid, with market participants bracing for potential volatility on a day known as “triple witching day.”
The tech-heavy Nasdaq Composite (COMP:IND) slipped 1.10% to 15,951.37 points in mid-day trade, weighed down by a ~14% post-earnings plunge in Adobe (ADBE). Analysts expressed concerns about the creative software maker’s ability to make money from artificial intelligence in the short-term.
The benchmark S&P 500 (SP500) was lower by 0.74% to 5,112.46 points, while the blue-chip Dow (DJI) retreated 0.45% to 38,730.15 points.
Of the 11 S&P sectors, seven were in the red, with Technology falling more than 1%. Energy led the gainers.
Friday marks a quarterly event where options tied to stocks, exchange-traded funds and equity indexes expire simultaneously. Options tied to more than $5T of such assets are set to expire today. The event happens four times a year – on the third Friday of March, June, September and December. The day has historically seen choppy trade and big price swings.
As it is, this week has been a turbulent one for markets. The S&P 500 (SP500) is on track to post four negative days in five, but the one session in which it did gain was by a solid +1%.
That session was Tuesday, in which traders shook off a hotter-than-expected consumer price index report, figuring that the data didn’t do much in terms of changing the Federal Reserve’s expected trajectory of interest rate cuts. However, the negative implications a hotter-than-anticipated producer price index report and weaker retail sales data on Thursday was harder to ignore.
Treasury yields had shot higher in the previous session as bonds had sold off, following the producer inflation and retail sales data. Yields were mixed on Thursday. The longer-end 30-year yield (US30Y) was down 1 basis point to 4.43%, while the 10-year yield (US10Y) was little changed at 4.30%. The shorter-end more rate-sensitive 2-year yield (US2Y) was up 3 basis points to 4.72%.
“The last 24 hours have seen a dramatic bond sell-off, with 10yr Treasury yields (+10.0bps) up to 4.29% as concerns mounted about stubborn inflation. The main driver was a strong U.S. PPI report, which showed that producer prices were rising faster than expected in February,” Deutsche Bank’s Jim Reid said.
“For markets, the big question is what this means for rate cuts. Up to now, futures had been focused on June as the most likely timing for the Fed’s first cut. But this week’s releases have led to growing doubts about that,” Reid said.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Friday’s economic calendar was fairly busy. Before the opening bell, Empire State’s reading of manufacturing showed that business activity continued to decline in New York state. After that, the Fed’s gauge of U.S. industrial production unexpectedly ticked up in February. Finally, shortly post the opening bell, the University of Michigan’s consumer sentiment index slipped by a whisker to 76.5 in March from 76.9 in February.
Turning to active stocks, Jabil (JBL) was the top percentage loser on the S&P 500 (SP500), after the manufacturing solutions provider missed quarterly revenue estimates.
Ulta Beauty (ULTA) was another notable S&P percentage loser after the beauty store chain guided for full year comparable sales that was lower than that in 2023.
