Stocks are trying to bounce, but the plumbing today is quadruple witching, not conviction buying.
SPY is indicating near 761-762 and QQQ near 717-719, both firmer in the pre-market as chip names (Intel, Nvidia) lead, but that follows a losing week: the S&P is set to close red even after Thursday's post-Fed rebound, and the Dow shed roughly 245 points Thursday as the 10-year yield backed up to just above 5%, its highest since 2007. The move traces to Wednesday's surprise 25bp Fed hike to 3.75%-4.00% on energy-driven inflation fears, with the dot plot signaling no cuts through year-end. That hawkish repricing is now fully in the tape; the debate has shifted to whether 10Y yields break and hold above 5% as WTI sits near $103.
Vol is choppy rather than elevated outright — VXX has ticked up on a "higher for longer" narrative — but today's quadruple witching, the first of its scale in roughly six years, is the bigger structural risk. Dealer hedges built around this week's Fed event are rolling off simultaneously with index and single-stock options, index futures, and equity futures, which can exaggerate moves in either direction once that flow clears. Data today (industrial production, capacity utilization, leading index) is secondary. Bitcoin above $80,000 and a dollar on pace for its best week since May underline a market still hunting for a clean risk signal.
The risk: a decisive 10Y break above 5% or another oil leg higher accelerates the hawkish repricing and, combined with witching-driven gamma unwind, sends SPY through the 755-750 support shelf rather than back toward 767-773.