Stocks opened lower Friday and stayed there through the close as several Magnificent 7 stocks sold off. A triple-witching event in the options market likely added to the volatility, with all three main indexes ending the week with a thud.
At the close, the tech-heavy Nasdaq Composite was down 1.0% at 15,973, while the broader S&P 500 was off 0.7% at 5,117 and the blue-chip Dow Jones Industrial Average was 0.5% lower at 38,714.
Friday marked the first triple-witching expiration of 2024. This quarterly event, which is when index futures, index options and stock options all expire at once, can lead to heavy volume and erratic moves in parts or all of the market. Today, options tied to more than $5 trillion in stocks, exchange-traded funds (ETFs) and indexes expired.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But the main driver of today's price action was weakness in the technology (-1.5%) and communication services (-1.0%) sectors. The downside came as several Magnificent 7 stocks declined, including Microsoft (MSFT, -2.1%), Alphabet (GOOGL, -1.3%) and Meta Platforms (META, -1.6%).
Analyst upgrades Snowflake from Sell
Elsewhere, Snowflake (SNOW) fell 1.2% even after Guggenheim Securities analyst John DiFucci upgraded the stock to Neutral (Hold) from Sell. While DiFucci says the cloud-based data platform faces a "mountain of challenges," its near-term setup is "attractive" and guidance for the current fiscal year is achievable.
SNOW's share price is down more than 30% since late February when the company gave weak first-quarter revenue guidance and announced the departure of CEO Frank Slootman.
The stock also happens to be a member of the Berkshire Hathaway equity portfolio, with Warren Buffett & Co. first reporting a stake in Q3 2020 as part of SNOW's initial public offering (IPO).
Adobe sinks after earnings
Adobe (ADBE) was another weak performer Friday, with the Photoshop parent spiraling 13.7% after earnings. Although the company reported higher-than-expected earnings and revenue for its fiscal first quarter and announced a new $25 billion stock buyback program, it gave weak second-quarter sales guidance.
Still, CFRA Research analyst Angelo Zino kept a Buy rating on Adobe stock. Despite the disappointing guidance, there is a strong potential for annual recurring revenue (ARR) to accelerate the rest of this fiscal year as "ADBE looks to monetize new AI offerings," Zino says, adding that Adobe "will also benefit from its large installed base, partnerships, and vast capabilities from ideation/editing/processing/publishing."
Fed meeting on deck
Looking ahead to next week, the Fed meeting could spark volatility in stocks. No change to the federal funds rate is expected this time around but the Fed's Summary of Economic Projections (SEP), or "dot plot," which summarizes what each member expects monetary policy to be going forward, could signal where the central bank expects it to be by year's end.
"Hotter-than-expected inflation data to start the year argue for a hawkish-leaning message from the Fed at the March FOMC meeting," says a team of economists at Deutsche Bank. "That said, in a very close call, we do not yet expect this to manifest in the Fed signaling less easing this year."
While the economists do anticipate a mild upward revision to the Fed's inflation forecasts for this year, "we expect the median dot to stay at three cuts for 2024."
According to CME Group's FedWatch Tool, futures traders are currently pricing in a 51% chance the first quarter-point rate cut will come in June.
Related content
- Get Free Doughnuts From Krispy Kreme Three Days In a Row
- Join the PARTY! (Wordle No. 775) — Friday Is 1,000th Wordle Puzzle Day
- Your Home Selling Costs To Fall Following NAR Settlement
-
RFK Jr. Now Heads HHS: How Medicare and Your Retirement May ChangeRobert F. Kennedy, Jr. was confirmed today to head up Medicare. Here are five ways his leadership might change your retirement.
-
Are Thousands of Armed IRS Agents Headed to the U.S.-Mexico Border?IRS Enforcement The Trump administration is considering a controversial move to redeploy some IRS agents.
-
The Trade Desk Stock Plunges on Soft Revenue, Weak OutlookThe Trade Desk stock is plunging Thursday after the advertising platform missed fourth-quarter revenue expectations and issued weak first-quarter guidance.
-
Reddit Stock Falls After User Number DisappointsReddit stock is down Thursday after the social media platform fell short of expectations on a key metric for its fourth quarter. Here's what you need to know.
-
Why Robinhood Stock Is Soaring After EarningsRobinhood stock is sizzling Thursday after the online trading platform reported impressive fourth-quarter results. Here's what investors need to know.
-
Heirs Inheriting Crypto? Don't Make It a Headache for ThemIf you have cryptocurrency in your estate, you'll need meticulous plans and clear instructions to ensure beneficiaries don't lose out after you're gone.
-
DIY Retirement Planning: A Smart Move or a Risky Endeavor?You can cut the cost of retirement planning by doing it yourself. But for something this important, it might be wiser to call in the professionals.
-
Galentine's Day: A Time to Promote Financial Literacy Among FriendsHere are three things women can do to help their friends gain financial knowledge and confidence.
-
Stock Market Today: Markets Turn Lower on Nasty Inflation SurpriseEquities sold off after a hot reading on consumer price inflation pushed back rate cuts to autumn or year-end.
-
CPI Report Puts the Kibosh on Rate Cuts: What the Experts Are Saying About InflationCPI Consumer price inflation reared its ugly head to start the year, dashing hopes for the Fed to lower borrowing costs anytime soon.
