Stocks in Choppy Trading Ahead of Big Options Day: Markets Wrap

(Bloomberg) -- Stock trading was volatile ahead of Friday’s options expiration. Treasuries rose alongside the dollar. Commodities sank.

The S&P 500 closed higher after swinging between gains and losses throughout most of the session, while the Cboe Volatility Index was on track for its biggest weekly surge since January. An earlier equity slide was driven by anxiety over the withdrawal of Federal Reserve stimulus, the coronavirus and global supply chains. Metals prices slumped as part of a selloff that extended to agriculture and oil.

Equities have struggled to sustain momentum after hitting another record earlier in the week. Investors are bracing for the withdrawal of unprecedented liquidity as the developed world looks to mass vaccinations to keep the recovery on track. However, the persistent spread of Covid-19 and slowing China growth raise questions on whether the economy can absorb the winding down of stimulus. That’s pushing traders to buy protection against stock swings.

“This week’s options expiration is likely amplifying the volatility,” wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. “This market remains complacent and vulnerable to ‘air pockets.’”

Concern about the rapid spread of the delta variant continued to weigh on sentiment. Patients are dying in U.S. hospitals at levels not seen since February -- and the numbers could worsen as intensive-care units overflow in parts of the South. Three American senators tested positive despite being vaccinated, bringing to at least six the number of members of Congress to report recent infections.

Nvidia Corp., the largest U.S. chipmaker by market value, rallied after reporting a surge in earnings and giving predictions that exceeded even rosy Wall Street estimates. Robinhood Markets Inc. sank after warning cryptocurrency-driven trading that fueled quarterly revenue may quickly fade. Chinese stocks listed in the U.S. endured another day of selling after officials unleashed a fresh round of proposed regulations. Tencent Holdings Ltd. and Alibaba Group Holding Ltd. each tumbled more than 6%.

For more market analysis read our MLIV blog.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.1% as of 4 p.m. New York time
• The Nasdaq 100 rose 0.5%
• The Dow Jones Industrial Average fell 0.2%
• The MSCI World index fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index rose 0.5%
• The euro fell 0.3% to $1.1676
• The British pound fell 0.9% to $1.3639
• The Japanese yen was little changed at 109.78 per dollar

Bonds

• The yield on 10-year Treasuries declined two basis points to 1.24%
• Germany’s 10-year yield was little changed at -0.49%
• Britain’s 10-year yield declined three basis points to 0.54%

Commodities

• West Texas Intermediate crude fell 2.1% to $64.08 a barrel
• Gold futures were little changed

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