Stock Volume Spikes Amid Record ‘Triple Witching’: Markets Wrap

(Bloomberg) — The last stretch of a busy week for markets saw stocks climbing while traders faced the expiration of a record pile of options that threatened to amplify price swings. Bitcoin jumped. Bonds fell.

A rally in several tech names that have been under scrutiny over their ambitious artificial-intelligence spending plans lifted equities. The back-to-back advance in the S&P 500 wiped out its loss for the week. Nvidia Corp. led gains in megacaps. Oracle Corp. surged about 6.5%.

More than 26 billion shares changed hands on US exchanges, about 50% above the 12-month average. Volume spiked amid a quarterly event known as triple witching — in which derivatives contracts tied to stocks, index options and futures mature.

Citigroup Inc. estimated that $7.1 trillion of notional open interest would expire.

“Does it matter for long-term investors? Absolutely not,” said Kenny Polcari at SlateStone Wealth. “Expect noise. Expect volume. Just don’t confuse either with something real or fundamentally meaningful. In the end, these moves are purely mechanical.”

Following a slide fueled by questions over AI exuberance and concerns over the scope of Federal Reserve policy easing, dip buyers waded back into the stock market. While a slew of economic data did little to provide clarity this week, traders continued to bet on two rate cuts in 2026.

Traders wondering if the typical year-end “Santa Claus rally” was ever going to kick in may finally be getting what they’ve been waiting for. That’s the period which typically encompasses the last five trading sessions of the year and the first two of the new one.

“Although this year’s start date is the Christmas Eve half-day, as is typical, it seems that traders are revving up their sleighs in advance,” said Steve Sosnick at Interactive Brokers.

The S&P 500 gained 0.9%. The Nasdaq 100 climbed 1.3%. Bitcoin added about 3%. Benchmark Treasuries saw their first weekly gain since the end of November, but lost steam Friday. The US 10-year yield rose three basis points to 4.15%.

Japan’s 10-year government bond yield hit the highest since 1999 and the yen weakened as uncertainty over the central bank’s policy path persisted even after it delivered a widely expected interest rate hike.

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Since 1928, the S&P 500 has climbed 75% of the time in the last two weeks of December, rising 1.3% on average, data compiled by Citadel Securities show. Individual traders have been net buyers of call options on US stocks for 32 of the past 33 weeks, the longest stretch in the firm’s data.

Investors are pumping money into US stocks at a near-record pace as they position for lower borrowing costs, tariff reductions and tax cuts in 2026, according to Bank of America Corp.

US equities saw inflows of almost $78 billion in the week ended Dec. 17, the bank said in a note citing data from EPFR Global. Tech contributed to inflows for the first time in three weeks.

“The trend remains positive, and a Santa Claus rally into the year-end won’t surprise anyone,” said Louis Navellier at Navellier & Associates. “I am expecting nothing less than a strong finish to the year and a strong start to 2026.”

The backdrop remains strong and the recent contraction in valuations is presenting opportunities for investors who don’t have enough stock exposure, according to Alexander Guiliano at Resonate Wealth Partners.

“It’s important for investors to not waste time trying to time the AI bubble,” he said. “We are seeing a structural investment boom, but even with that, we urge investors to actually invest and not speculate.”

Guiliano advises investors to focus on companies that can lead the way in building and enabling, while having the financial strength to pivot, make mistakes, and win the arms race anyway.

“Many of the big tech companies fit this mosaic, even though their valuations are elevated,” he said.

Investors buffeted by April’s extreme turbulence could hardly have anticipated the relatively smooth ride they had the remaining three-quarters of the year. No drawdown exceeded 5% until November, with each dip enthusiastically snapped up at a rapid clip.

The AI narrative, solid earnings and the leftovers from April’s sudden positioning washout encouraged investors to chase stocks steadily higher. The impressive rally stalled only as exuberance over AI was questioned in the final stretch of the year.

At Nationwide, Mark Hackett says that despite the recent rout, stock-market action below the surface is encouraging. Among the reasons, he cited healthy breadth, shifting leadership, and greater discernment by investors around valuations.

“We maintain an attractive view on US equities, driven by resilient economic growth, Fed rate cuts, and AI advances,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.

Aside from US equities, she also sees opportunities in quality bonds and gold. With the appeal of the US dollar eroding amid lower interest rates, she recommends that investors review their currency allocations.

“We expect US dollar weakness to persist into the first half of 2026,” Hoffmann-Burchardi noted.

On the economic front, US consumer sentiment rose in December by less than expected, remaining depressed amid lingering affordability concerns. Existing-home sales barely rose in November.

Fed Bank of New York President John Williams told CNBC there’s no urgency to cut rates again given recent employment and inflation data, reinforcing expectations for a pause after a string of recent reductions.

Rate cuts by the Fed and firm growth should extend the economic cycle and support risk assets, though the next phase may be choppier, according to Goldman Sachs Group Inc. strategists.

“Sturdy global growth coupled with non-recessionary Fed cuts should be positive for global equities, but tensions with ‘hot valuations’ may increase volatility,” strategists including Kamakshya Trivedi wrote in a note dated Thursday. Still, the setup is supportive for stocks and emerging-market assets, and mildly negative for the dollar, they added.

Corporate Highlights:

President Donald Trump announced deals with nine pharmaceutical companies on Friday, the latest in a series of pacts designed to lower drug prices for some Americans in exchange for a three-year reprieve from threatened tariffs. Trump said he would convene insurance companies in the coming weeks in a bid to pressure them to reduce costs for Americans who will see their premiums rise following the expiration of Obamacare subsidies at year’s end. FedEx Corp. rose after raising the low end of its profit outlook for the year and reported earnings for the most recent quarter that topped Wall Street estimates, helped by volume and pricing gains in the US. Nike Inc. sank after warning that sales will decline this quarter amid persistent weakness in China and at its Converse brand. Boeing Co. asked the Federal Aviation Administration to temporarily exempt its 777 freighter from an international rule on greenhouse gas emissions that takes effect at the end of 2027, citing a global shortage of widebody cargo jets. UnitedHealth Group Inc. released the first outside reviews of its business practices — reports it commissioned that describe its policies as “robust” while pointing to ongoing problems in areas that have faced scrutiny. Carnival Corp. gave a better-than-expected profit outlook for next year and reinstated dividend payments, sending shares higher. BioMarin Pharmaceutical Inc. agreed to buy Amicus Therapeutics Inc. for about $4.8 billion, helping the biotech company expand its portfolio of treatments for rare diseases. Coty Inc. has sold its remaining stake in Wella to KKR & Co. for $750 million in cash and rights to certain future proceeds as the beauty company works to reduce its debt load. DraftKings Inc. is releasing a new app on Friday that will allow customers to trade contracts on sports and financial events through prediction markets. WH Smith Plc is under investigation by the UK’s Financial Conduct Authority over the accounting error in its North American business that triggered a stock slump and the resignation of its chief executive officer. BBVA SA said it will carry out its largest share buyback ever as it seeks to draw a line under its failed bid for Banco Sabadell SA. A.P. Moller-Maersk A/S completed its first Red Sea transit in nearly two years, marking a tentative step toward restoring routes through the Suez Canal following years of conflict in the region. BHP Group Ltd.’s top boss said he’s moving on after the company’s aborted attempt to buy Anglo American Plc, preferring instead to focus on its copper projects and opportunities in Canada. ByteDance Ltd. is on track for profits of roughly $50 billion in 2025, capping a record year for a Chinese social media leader making major inroads into e-commerce and new markets. Some of the main moves in markets:

Stocks

The S&P 500 rose 0.9% as of 4 p.m. New York time The Nasdaq 100 rose 1.3% The Dow Jones Industrial Average rose 0.4% The MSCI World Index rose 0.7% Bloomberg Magnificent 7 Total Return Index rose 0.7% The Russell 2000 Index rose 0.9% Oracle rose 6.6% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro was little changed at $1.1711 The British pound was little changed at $1.3375 The Japanese yen fell 1.4% to 157.69 per dollar Cryptocurrencies

Bitcoin rose 2.7% to $87,864.59 Ether rose 5.6% to $2,985.38 Bonds

The yield on 10-year Treasuries advanced three basis points to 4.15% Germany’s 10-year yield advanced five basis points to 2.90% Britain’s 10-year yield advanced four basis points to 4.52% The yield on 2-year Treasuries advanced two basis points to 3.48% The yield on 30-year Treasuries advanced two basis points to 4.83% Commodities

West Texas Intermediate crude rose 0.9% to $56.66 a barrel Spot gold rose 0.1% to $4,338.56 an ounce –With assistance from Lu Wang.

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