Despite a roller coaster ride the last few days, Friday dawns with the broader market on pace for weekly gains and only about 1% below July's peak. Trade policy remains in the spotlight as Tuesday's deadline for a deal with China approaches, and many companies exposed to fresh tariffs saw their shares decline yesterday. Major indexes rose this morning as six of the Magnificent Seven gained before the open.
On a day lacking fresh data, one new headwind could be poor demand for Treasuries across several recent auctions. With yields down from recent highs on signs of economic weakness, bond buyers didn't seem eager to scoop up the government's new debt offerings. Soft auction demand often forces yields up, which makes borrowing more costly. Another concern is Wall Street's recent inability to hold gains. Most recent sessions began higher only to run into selling, with yesterday a prime example. Major indexes closed mostly lower Thursday as an early rally faded, though the Nasdaq marched to its own beat and posted a new closing record.
"Day-to-day volatility has been picking up, VIX has been seeing signs of life, and the VIX term structure is steep," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research, referring to the CBOE Volatility Index (VIX). October VIX futures reached nearly 21 versus under 17 yesterday for spot VIX, implying participants expect more volatility in coming months. That often correlates with pressure on Wall Street. "The odds of a 3% to 7% pullback in stocks is higher than average at this juncture," Peterson said.
Source: Schwab Center for Financial Research
Morning Rush
The 10-year U.S. Treasury yield (TNX) is 4 basis points higher at 4.28%.
The U.S. Dollar Index ($DXY) is lower by 0.20 to 98.20.
WTI Crude Oil (/CL) is higher by 0.80% to $64.39/barrel.
Gold prices have traded in a range of $3,468.60-$3,532.20, last seen trading higher by 0.98% to $3,487.60/oz.
Natural Gas prices have traded in a range of $2.97-3.11 and were last seen trading lower by 3.10% to $2.97.
Bitcoin (BTC) is losing ground and was last seen down by ~0.87%, at $116,475.00.
Today's Bullish Activity
Gapping up to over a 3 1/2 -year high this morning is Expedia Group Inc. (EXPE + $26.89 to $214.50) after the online travel agency reported fiscal-year Q2 earnings-per-share of $4.24 (excluding non-recurring items), compared to the FactSet consensus estimate of $3.97. Revenue grew 6.0% year-over-year (y/y) to $3.79 billion, topping analysts' estimates of $3.71 billion. EXPE also raised its outlook for 2025, citing continued strength in B2B and advertising, along with further progress on its key priorities. Calls are outnumbering puts ~2:1 with the August 8th 195.00 call seeing the most action from traders (volume is 7,643).
Also jumping to a record high this morning is Monster Beverage Corporation (MNST + $4.90 to $65.70) after the energy drink maker reported fiscal-year Q2 earnings-per-share of $0.51 (excluding non-recurring items), exceeding the FactSet estimate of $0.48. Revenues rose 11.1% year-over-year to $2.11 billion, north of the expected $2.08 billion. This was the first quarter that revenue breached the $2.0 billion mark in company history, on rising demand for energy drinks, which more than offset headwinds from foreign exchange. Calls are modestly outnumbering puts though the August 8th 64.00 put is seeing the most action from traders (volume is 414).
New 52-week highs (139 new highs today): Deutsche Bank Ag (DB + $0.20 to $35.82), Legalzoom Inc. (LZ + $2.93 to $11.30), Sony Group Corp. ADR (SONY + $0.96 to $27.00)
Notable Call Activity
Some unusual call activity (~32:1 calls over puts) is being seen in FTAI Infrastructure Inc. (FIP - $0.85 to $5.40) driven by activity on the January 16th 5.00 call for this infrastructure company. Volume is 2,699 versus open interest of 667, so it's likely we have some fresh positioning here. The bulk of the activity consisted of multiple various-sized blocks that were bought around the same time at the ask price of $1.10 each, which suggests bullish intent.
Today's Bearish Activity
Trading solidly lower this morning is Under Armour Inc. (UAA - $1.37 to $5.27) after the footwear and apparel company reported fiscal-year Q1 earnings-per-share of $0.02 (excluding non-recurring items, missing the FactSet estimate of $0.03, as revenues declined 4.2% year-over-year to $1.10 billion, just shy of the expected $1.13 billion. UAA also issued Q2 guidance that came in well below analysts' forecasts, due to ongoing uncertainty around trade policies and the broader macroeconomic environment, including potential demand and cost impacts from tariffs. Calls are outnumbering puts ~2:1 with the December 18th 7.50 call seeing the most action from traders (volume is 1,108).
The Trade Desk Inc. (TTD - $31.08 to $57.25) is falling over 30% this morning after the digital and marketing content delivery technology company warned that tariffs could have an effect on ad demand and also announced the departure of its CFO. TTD is falling despite the company reporting fiscal-year Q2 earnings-per-share of $0.41 ($0.23 beat) on revenue of $694 million ($8 million beat). Calls are slightly outnumbering puts, but the August 8th 55.00 put is seeing the most action from traders (volume is 26,496).
New 52-week lows (108 new lows today): Godaddy Inc. (GDDY - $6.15 to $144.10), ICU Medical Inc. (ICUI - $10.72 to $119.19), Yelp Inc. (YELP - $3.02 to $31.16)
Notable Put Activity
Some unusual put activity (~10:1 puts over calls) is being seen in Paychex Inc. (PAYX + $0.63 to $141.15) which is primarily being driven by activity on the October 17th 140.00 put for this HR and payroll company. Volume on this contract is 3,100 versus open interest of 126, so we know nearly all of this activity represents fresh positioning. The volume was driven by various-sized contract blocks that were bought between $4.77 - $4.90, suggesting bearish intent.
Volume Signals
American Axle & Manufacturing Holdings Inc. (AXL + $0.59 to $5.17). Option volume is running at ~47x the daily average on this American auto driveline and drivetrain manufacturer which is primarily being driven activity on the August 15th 5.00 call. Volume is 5,762 versus open interest of 519, so we know that the activity mostly consists of fresh positioning. The bulk of the volume consisted of a 1,280 contract block that was bought at the ask price of $0.30, which suggests bullish intent.
Petroleo Brasileiro SA ADR (PBR - $0.83 to $12.25): Option volume is running at ~10x the daily average on this Brazilian petroleum company with the bulk of activity focused on the September 19th 12.00 put. Volume on this contract is 25,657 versus open interest of 12,500. We know we have fresh positioning here based on the open interest figure, and the activity was primarily driven by a 10,220 contract block that was sold at the bid price of $0.34, suggesting neutral to bullish intent.
Expand Energy Corporation (EXE - $1.23 to $98.78): Option volume is running at ~12x the daily average on this independent natural gas producer which is primarily being driven by activity on the December 19th 90.00 put. Volume on this contract is 4,392 versus open interest of 426, so we know we have fresh positioning here. The bulk of the activity consisted of a 4,390 contract block that was bought at $4.11 when the bid/ask spread was $2.89 x $4.50, suggesting bullish intent since the trade took place above the midpoint of the bid/ask spread.
Gauging Volatility
The Cboe Volatility Index (VIX – 0.73 to 15.84) has been in negative territory all day (intraday range is 15.58-16.52), as equity markets are mostly higher around the midday mark (DJI + 179, SPX + 42, COMPX + 170). VIX option volume is below average today as the index is missing from the "Top Volume by Underlying" list. The volume put/call ratio is currently 0.46, with the August 20th 29.00 call the highest volume contract (volume is 30,825).
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