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The S&P 500 (SP500) was very close, just 20 points away from an all-time high, when sentiment turned sour on Wednesday. The index abruptly fell 1.5% mid-afternoon trading in a move attributed to overbought territory and one from this year hottest trades.
Zero-day options, or 0DTE, involve trading an options contract on the day it expires. Traders use the strategy to make quick money and protect themselves against short-term market movements. Some analysts blamed the rapid pullback in the final two hours of yesterday's session on a sharp rise in “sell” volumes that prompted option holders to dump underlying stocks or market makers to hedge their exposures.
Things are looking better Thursday morning, and futures point to a rebound on Wall Street. At the time of writing, Dow-linked contracts (dji), S&P 500 (SP500) and Nasdaq (IND COMP.) are up to 0.4%, 0.5% and 0.7%respectively.
New economic data today will include figures on US GDP, jobless claims and the manufacturing sector, and whether they could take advantage of the favorable housing market and consumer confidence figures that reinforced bets on a soft landing engineered by the Federal Reserve. Nike will also report its results after the bell, giving a new look at consumer spending.
