- US stocks traded slightly lower as investors pressed pause on the rally to record highs.
- The S&P 500 and Dow Jones hit record highs on Thursday after the Federal Reserve’s 50 basis point rate cut.
- Heavy trading is expected on Friday due to option expirations and S&P quarterly index rebalancing.
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US stocks traded sightly lower on Friday as investors pressed pause on the ongoing rally to record highs.
The muted trading activity on Friday followed Thursday’s trading session, which saw the S&P 500 and Dow Jones Industrial Average indexes leap to record highs, while the Nasdaq 100 surged nearly 3%.
Those gains were sparked by the Federal Reserve’s Wednesday interest rate cut of 50 basis points, the first rate cut in over four years.
For a lot of investors, the Fed’s dovish move suggests that a soft landing for the US economy is within reach, with markets clinging to Fed Chair Jerome Powell’s characterization of the economy and the labor market as being a good place.
“We continue to believe a soft landing is the most likely economic scenario which makes the current environment most comparable to the mid-1990s,”BMO’s Brian Belski said in a note on Thursday.
According to NYSE senior market strategist Michael Reinking, Friday could see heavy trading activity due to a surge in option expirations.
The so-called triple witching day occurs when there is a simultaneous expiration of stock options, index options, and index futures contracts. It occurs on the third Fridays of March, June, September, and December every year, and sees heavy trading and a potential burst of volatility.
“Today is triple witch expiration and the S&P quarterly index rebalances which is typically one of the heaviest volume days of the year, primarily occurring in the closing auction. If the market starts to trend and break strikes this could add to the momentum,” Reinking said in a note on Friday.
Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Friday:
- S&P 500: 5,705.86, down 0.14%
- Dow Jones Industrial Average: 41,984.29, down 0.08% (-34.30 points)
- Nasdaq composite: 17,991.88, down 0.12%
Here’s what else is going on:
- Trump Media stock plunged to a record low as the lockup period for insiders expires, giving them clearance to sell shares.
- Home Depot and Lowe’s are already seeing the benefits from the Fed’s first interest rate cut.
- The Federal Reserve is following its 1995 playbook, which is great news for both the stock market and economy.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil decreased 0.46% to $70.83 a barrel. Brent crude, the international benchmark, dropped 0.55% to $74.47 a barrel.
- Gold was up 0.89% to $2,637.80 an ounce.
- The 10-year Treasury yield was higher by 3 basis points at 3.746%.
- Bitcoin was down 0.02% to $62,948.
