Stocks Waver as Nvidia Loses $200 Billion in Value: Markets Wrap

(Bloomberg) — Stocks fluctuated as Nvidia Corp. led a selloff in chipmakers and a pile of options expiring Friday threatened to trigger sudden price swings.

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Wall Street is facing a quarterly episode ominously known as “triple witching” in which derivatives contracts tied to equities, index options and futures are scheduled to mature — compelling traders en masse to roll over their existing positions or to start new ones. About $5.5 trillion are set to expire Friday, according to an estimate from options platform SpotGamma.

The S&P 500 fluctuated amid trading volume that was 90% above the past month average. Nvidia extended a two-day stock rout that has wiped off more than $200 billion from the company at the heart of the artificial-intelligence boom. The value of contracts tied to the chipmaker set to expire Friday is the second-largest of any underlying asset, lagging only the benchmark gauge.

The expiration also coincides with index rebalancing, when S&P Dow Jones Indices shuffles company weightings and ETFs that track its gauges make similar adjustments.

Treasuries lost traction after data showed US services activity picked up early this month to the fastest pace in more than two years while the outlook improved on cooler price pressures and prospects for lower borrowing costs. Separately, sales of existing homes fell for a third straight month.

At a time when the US stock market is breaking old records and setting new ones seemingly every day, bearish investors can’t be blamed for getting out of the way. Yet their increasing absence is leaving equities ever more exposed in the event of a sudden shift in sentiment.

Short interest in the two biggest equity exchange-traded funds — the SPDR S&P 500 ETF Trust (ticker SPY) and the Invesco QQQ Trust Series 1 (QQQ) — have plunged to record lows this year, providing a steady flow of support to stocks and helping to suppress volatility, JPMorgan strategists led by Nikolaos Panigirtzoglou wrote this week.

At the same time, the stark absence of investors willing to bet on a decline in equities “signal a heightened vulnerability to negative news,” the strategists said.

The ongoing AI frenzy that briefly made Nvidia the world’s most-valuable company this week also drove record inflows into tech funds, said Bank of America Corp. strategists. About $8.7 billion flowed into tech funds in the week through June 19, according to a note from the bank citing EPFR Global data.

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Corporate Highlights:

• Airbus SE is edging closer to an agreement with Spirit AeroSystems Holdings Inc. to take over parts of the aerospace supplier’s business, paving the way for an acquisition of the bulk of the company by arch-rival Boeing Co. as early as next week.

• American Airlines Group Inc. is suspending training for new pilots through the end of this year, the latest pullback by a major US carrier in the face of uneven travel demand and delayed aircraft.

• Sarepta Therapeutics Inc.’s gene therapy received expanded US approval to include more children with a deadly muscle disease, expanding the market for a controversial treatment that still hasn’t proved its benefit in clinical trials.

• Carlsberg AS said it’s weighing its options after Britvic Plc rejected unsolicited takeover bids that valued the UK soft-drink maker at as much as £3.1 billion ($3.9 billion).

• Prime Minister Justin Trudeau’s government is preparing potential new tariffs on Chinese-made electric vehicles to align Canada with actions taken by the US and European Union, according to people familiar with the matter.

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 11:11 a.m. New York time

• The Nasdaq 100 was little changed

• The Dow Jones Industrial Average rose 0.1%

• The Stoxx Europe 600 fell 0.6%

• The MSCI World Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.2% to $1.0685

• The British pound fell 0.2% to $1.2631

• The Japanese yen fell 0.4% to 159.58 per dollar

Cryptocurrencies

• Bitcoin fell 1.4% to $64,169.19

• Ether fell 0.4% to $3,509.32

Bonds

• The yield on 10-year Treasuries was little changed at 4.27%

• Germany’s 10-year yield declined three basis points to 2.41%

• Britain’s 10-year yield advanced two basis points to 4.08%

Commodities

• West Texas Intermediate crude rose 0.2% to $81.46 a barrel

• Spot gold fell 1.1% to $2,333.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

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