Most of the trading session made sense yesterday, with the index gapping lower and then spending most of the day grinding higher as puts were closed and implied volatility fell. The final 20 minutes were something different, which goes to show the effect, or for that matter, what happens when liquidity is absent. The top of the book in the futures is non-existent, and in essence, it doesn’t take very much to move the market.
So when you get about $3 billion to buy on the market on close due to month-end rebalancing, we get these outsized end-of-day moves.
It was able to drive the S&P 500 roughly 1% higher in the final 20 minutes of trading, helping the index finish up about 15 basis points on the day after it had been down nearly 2% earlier in the morning.
It tough to say where the end of day leaves things, given how odd it was, and with earnings and conference calls after hours, and loads of economic data to continue coming out in the days ahead, tough to look at the final 20 minutes of trading with anything other than it was something mechanical in nature.
As for the earnings, Meta (NASDAQ:META) reported results that came in better than expected and gave revenue guidance that appears to be basically in line with expectations. So it is a bit surprising to me to see the stock trading higher, especially given how high IV was heading into it and how bullishly the stock was positioned. I guess what I’m saying is that I wouldn’t be surprised to see the gains given back, but at least at present, the shares are trading higher around $575.
Microsoft (NASDAQ:MSFT) reported strong earnings that were better than expected, with strong growth in Azure, and also provided solid-looking guidance. So, seeing the shares trade higher makes sense.