Here’s what stock-market experts are blaming Friday’s wild price swings—and it’s not just quadruple witching – MarketWatch

December 17, 2021 by No Comments

Friday is shaping up to be a doozy of a session on Wall Street, capping what has been a stomach-churning ride in markets over the past few weeks.

“Please fasten your seat belts and return your tray table to its full upright and locked position,” quipped Art Hogan, chief market strategist at National Securities Corporation, in comments to MarketWatch Friday afternoon.

The U.S. stock market’s Friday action seems particularly frenetic, and experts say that investors can attribute at least a part of the session’s moves to one novel factor: quadruple witching.

“This is the classic definition of volatility; big swings in both directions,” Randy Frederick, managing director trading and derivatives at Charles Schwab & Co., told MarketWatch on Friday.

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Quadruple witching, occurs on the third Friday of the month of every quarter, in March, June, September, and December, and refers to the simultaneous expiration of single-stock options, single-stock futures, and stock-index options and stock-futures.

On Friday, the Dow Jones Industrial Average
traded at a low of 35,284, down 1.7% or 613 points, until paring losses in afternoon trade. The decline for the blue-chip index at its least severe on Friday intraday was down by 98 points.

The Nasdaq Composite Index
which is up 0.4%, has seen even more pronounced moves, and was up 108 points, or 0.7%, at its intrasession peak and down 1.4% or about 200 points at the day’s low.

The S&P 500
meanwhile, was off 0.5%, at 4,645, but had been as low 4,600.22 on the session and up around 4,666.70.

However, quad witching isn’t the only factor whipsawing markets.

Equity markets have been experiencing gyrations since the Federal Reserve on Wednesday confirmed plans step up the pace of reducing market-supportive accommodations by tapering bond purchases at a more accelerated rate. On top of that, the central bank’s projections for interest rates point to three quarter-of-a-percentage-point increases in benchmark federal funds rates, which currently stand at a range between 0% and 0.25%.

Frederick said that amplifying the moves is concerns about “high interest rates,” and the battle playing out between those positioning for a higher interest-rate environment and those “who are worried about high inflation.”

National’s Hogan emphasized that usually quad witching isn’t as much of a factor but the volume of contract expirations, which was at a 10-year high, also …….



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