U.S. stock futures pointed to losses on Friday, ahead of “massive” options expirations and amid worries over the continued Russia-Ukraine war. Still, major indexes were set for the best weekly returns since late 2020.
How are stock-index futures trading?
-
S&P 500 futures
ES00,
-0.58%
dropped 0.6% to 4,374 -
Dow Jones Industrial Average futures
YM00,
-0.49%
fell 166 points, or 0.5%, to 34,193 -
Nasdaq-100 futures
NQ00,
-0.62%
fell 0.6% to 14,024
On Thursday, the Dow Jones Industrial Average
DJIA,
rose 417.66 points, or 1.2%, to close at 34,480.76. The S&P 500
SPX,
gained closed up 1.2% to 4,411.67, the Nasdaq Composite
COMP,
advanced 1.3% to 13,614.78.
What’s driving the markets?
All three major indexes are set for their best weekly returns since the week ending Nov. 20, 2020, with the S&P 500 up nearly 5% and the Dow industrials gaining 4.6%, as of Thursday. The Nasdaq has gained 6% as investors have jumped back into tech stocks.
Stocks got a lift from an optimistic economic view this week from Federal Reserve Chairman Jerome Powell, as the central bank hiked interest rates by an expected 25 basis points and promised more to come. Data for Friday includes existing home sales and leading indicators, both for February.
Read: Oil prices are the ‘linchpin’ for markets as Russia wages war on Ukraine, says CIO Bob Doll
Investors have also been cheered this week by signs of potential progress between Ukraine and Russian negotiators, though that appeared to be fading some. U.S. Secretary of State Antony Blinken reportedly said in a briefing Thursday that a diplomatic solution to the war in Ukraine looked increasingly unlikely, as Russia shows no signs of letting up its attacks.
“It’s becoming increasingly obvious that Russia’s interest in a negotiated agreement probably doesn’t extend beyond optics, and that it isn’t serious about a cessation of hostilities,” said Michael Hewson , chief market analyst at CMC Markets, in a note to clients.
“There is also the added complication that any cease-fire would require a major climbdown from one side or the other, and with their respective positions still being miles apart, and Russia still targeting civilians, an imminent de-escalation doesn’t look likely at this point,” he said.
Fresh attacks by Russian forces hit the western city of Lviv and the capital Kyiv. Its forces have been blamed for an attack this week on a theater in devastated Mariupol serving as a shelter and clearly been marked as “children inside.”
And new report by the U.S. Defense Intelligence Agency warned that an increasingly desperate President Vladimir Putin could threaten the West with nuclear weapons to try to turn the tide, Bloomberg News reported.
President Joe Biden is expected to warn his China counterpart Xi Jinping that providing military or economic assistance for Russia’s Ukraine invasion will lead to severe consequestions.
Friday also marks “massive” quarterly options expirations on Friday for derivatives such as options on equity futures, noted the Saxo Bank Strategy team. “Hedging related to derivatives with some $3.5 trillion in underlying exposure could explain some of the price action in U.S. equity markets this week ahead of today’s options expiration,” they said in a note to clients.
“In addition, options with strike prices near the current S&P level are said by some sources to be the largest in years,” the strategists said.
Across other assets, oil prices
CL00,
CLJ22,
were modestly higher, while gold futures
GC00,
dropped 0.5% and the yield on the 10-year Treasury note
TMUBMUSD10Y,
fell 3 basis points.