Key Points
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The stock market has plunged on market open due to weak earnings from multiple big companies.
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There’s more uncertainty, as today is also a triple-witching day.
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Chicago Fed’s Goolsbee has made some comments in which he acknowledged that the Fed itself is uncertain.
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Friday kicked off with a rough morning for the stock market, and major indices started sliding again. The market as a whole has been quite volatile and has reacted strongly to any macro news due to the lack of clarity on where the economy is heading. For example, the market opened red yesterday but then recovered substantially before closing red again.
Today, the sentiment also remains sour. Certain big companies failed to impress Wall Street, and investors have taken this as a sign that consumer spending could be softening. Not only that, today is also a triple-witching day. We’ll get into that later.
Here’s a market update as of 10:00 A.M (ET) today.
- The S&P 500 is down 48.9 points, or 0.86%.
- The Nasdaq Composite is down 112.7 points, or 0.637%.
- Dow Jones Industrial Average is down 394.87 points, or 0.94%.
Markets Open Lower Amid Earnings Disappointment
Weak earnings are the main culprit behind the red open today. Nike (NYSE: NKE), FedEx (NYSE: FDX), and Micron (NASDAQ: MU) all posted results that failed to impress Wall Street.
A few bad earnings reports are routine, but it is concerning for several big-name companies to disappoint all at once.
Triple-Witching Adds More Uncertainty
Today is a triple-witching day. This is a quarterly event that happens on the third Friday of March, June, September, and December. On this day, stock options, stock index futures, and stock index options all expire simultaneously.
It is expected that around $4.5 trillion in options contracts will expire today, and this is naturally going to amplify trading volumes and price swings.
The final hour during triple-witching (called witching hour) can be the most chaotic since traders rush to close, roll over, or offset their positions. For example, short-term traders might exploit the volatility for quick gains, while long-term investors sit tight or scoop up discounted shares.
Either way, the expiration of these contracts is like tossing a match into an already jittery market. Historical data suggests triple-witching can lead to unpredictable price action, and today looks no different.
Macro News
There’s not much macroeconomic data coming in this morning. Here’s what we have as of now:
- The UAE committed to a 10-year, $1.4 trillion investment framework after the Trump meeting.
- White House begins a review of Federal agency plans for another round of layoffs.
- U.S. 10-year TIPS reopening auction (yesterday): Yield at 1.935%, which is slightly lower than the 1.98% to 1.99% expected.
Fed Uncertainty and Tariff Tensions
Considering how much tariffs were discussed in the past couple of weeks, it may seem like old news. However, this is something that could make or break the market in the next couple of weeks due to how much it can impact the economy.
Trump seems adamant that retaliatory tariffs will go into effect on April 2. The consequences of that could drag the market lower if it does materialize. If it does not, the market could recover since no tariffs would mean lower inflation and, hopefully, lower interest rates.
The recent FOMC meeting has left investors on edge. Earlier this week, Fed Chair Jerome Powell called inflation “transitory,” which isn’t something many wanted to hear, given that the same comment preceded an inflation wave that is still ongoing.
Chicago Fed’s Goolsbee was on CNBC today, and he made the following comments:
“We need to be careful when you say transitory, the answer to what ‘transitory’ means this time around is whether the tariffs apply to intermediate goods, stoke retaliation, and other factors.”
“When you have a lot of uncertainty you have to wait for things to clear up.”
“Current conditions are maybe a shock to the economy depending on how long they last.”
“There’s a lot of strength in the hard economic data.”
“Before judging how monetary policy reacts to tariffs, the Fed needs to know how long the tariffs last, possible retaliation, pass through to consumers.”
“I still believe the economy is resilient and if there is progress on inflation rates will be lower in 12 to 18 months.”
“Tariffs raise prices and reduce output, which is a stagflationary impulse.”
The image featured at the top of this post is ©monsitj / iStock via Getty Images.