The stock market had a tough session as “quadruple-witching” Friday brought an afternoon selloff.
All of the major stock market indices finished Friday’s session in the red, as “quadruple witching” day sparked an afternoon selloff. On “quadruple-witching” day, contracts expire for stock index options, stock index futures, individual stock futures, and individual stock options. Quadruple witching usually increases stock market volatility. The Chicago Board Options Exchange Volatility Index (VIX) jumped 3.31 percent to finish Friday’s session at 15.00. The Nasdaq was particularly hard-hit, as investors dumped shares, which had been bought as “momentum” stocks just a few weeks ago.
The SPDR Dow Jones Industrial Average ETF (ARCA:DIA) lost 28 points to finish Friday’s trading session at 16,302 for a 0.17 percent decline. The SPDR S&P 500 ETF (ARCA:SPY) retreated 0.29 percent to 1,866.
The PowerShares QQQ ETF (NASDAQ:QQQ) sank 1.11 percent to finish at 3,653. The iShares Russell 2000 Index (ARCA:IWM) declined 0.44 percent to 1,193.
In other major markets, oil (USO) climbed 0.73 percent to close at $35.84.
On London’s ICE Futures Europe Exchange, May futures for Brent crude oil advanced 70 cents (0.66 percent) to $106.94/bbl. (NYSEARCA:BNO).
April gold futures advanced $4.00 (0.30 percent) to $1,334.50 per ounce Gold Trust (ARCA:GLD).
The transportation sector spent too much time at the rest stop during Friday’s trading session, as the Dow Jones Transportation Average declined 0.36 percent to 7,55 (NYSEARCA:IYT).
The stock market was closed in Japan on Friday, due to the Vernal Equinox holiday. When America’s stock exchanges closed at 4:00, the yen had strengthened to 102.14 per dollar. A stronger yen causes Japanese exports to be less competitively-priced in foreign markets (ARCA:FXY). The Nikkei 225 Stock Average finished Thursday’s session with a 1.65 percent drop to 14,224 (EWJ).
In China, stocks made some sorely-needed gains after the nation’s Securities Regulatory Commission initiated a trial program, allowing companies to sell shares of preferred stock. The program is limited to companies listed on the Shanghai Stock Exchange 50 A-Share Index. In stark contrast to what was experienced in the United States, expiration of futures contracts sparked a late-day rally, sending stocks even higher. The Shanghai Composite Index soared 2.72 percent to 2,047 (iShares FTSE/Xinhua China 25 Index) (ARCA:FXI). The advance brought the index above the neckline of the bearish, head-and-shoulders pattern on the Shanghai Composite’s chart, breaking the pattern’s curse. Hong Kong’s Hang Seng Index jumped 1.20 percent to 21,436 (iShares MSCI Hong Kong) (ARCA:EWH).
In Europe, stocks advanced on Friday after the European Central Bank reported that the Eurozone enjoyed a current account surplus of €25.3 billion in January compared to a downwardly-revised €20 billion in December (which was initially reported as €21.3 billion). Economists had been expecting a decline to €18.4 billion. The European Commission also brought some good news, reporting that its flash estimate of Eurozone consumer confidence for March rose to a “less bad” negative 9.3 from February’s negative 12.7. In the greater, 28-nation European Union, consumer confidence rose to 6.7 in March from February’s negative 9.3. The Euro STOXX 50 Index advanced 0.25 percent to 3,096 – rising further above its 50-day moving average of 3,087. Its Relative Strength Index climbed from 50.81 to 52.09 (FEZ).
Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,832 on Friday, after a 0.29 percent decline to 1,866. Its Relative Strength Index (RSI) fell from 58.31 to 55.92. The MACD is at a level trajectory below the signal line, suggesting that the S&P could remain in the 1,865 – 1,875 range during the immediate future.
On Friday, all sectors were solidly in negative territory. The healthcare sector took the hardest hit, falling 2.15 percent.
Consumer Discretionary: SPDR Consumer Discr. Select Sector (ARCA:XLY): -0.95%
Technology: SPDR Select Sector - Technology (XLK): -0.93%
Industrials:Industrial Sector SPDR Trust (ARCA:XLI): -0.42%
Materials:SPDR Materials Select Sector (ARCA:XLB): -0.82%
Energy: SPDR Energy Select Sector Fund (ARCA:XLE): -0.22%
Financials: (NYSEARCA:XLF): -0.36%
Utilities: SPDR Select Sector - Utilities (XLU): -0.07%
Health Care: SPDR - Health Care (ARCA:XLV): -2.15%
Consumer Staples: SPDR - Consumer Staples (ARCA:XLP): -0.56%
Bottom line: Quadruple-witching Friday took its toll, as soaring stock market volatility sent the VIX 3.31 percent higher. Both the Dow and the S&P 500 gave up their morning advances to finish the day in the red.
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