S&P 500 Slumps as Jobless Claims Rise, Meta Freezes AI Hiring
The S&P 500 index fell 0.43% amid rising jobless claims, marking a fourth consecutive day of losses. Meta announced an AI hiring freeze, contributing to skepticism around the AI sector. Walmart's shares dropped 2% after disappointing earnings. Meanwhile, 10-year T-Note futures declined as traders anticipate an 80% chance of a Fed interest rate cut next month. Gold prices remained stagnant, influenced by a stronger dollar and higher yields, while crude oil prices faced uncertainty over potential peace negotiations between Russia and Ukraine.
Also 10-year T-Note, Gold, Crude Oil, and Euro Futures
- S&P 500 E-mini futures (/ES): -0.43%
- 10-year T-Note futures (/ZN): -0.11%
- Gold futures (/GC): -0.14%
- Crude Oil futures (/CL): +0.02%
- Euro futures (/6E): -0.08%
The week leading into Fed Chair Jerome Powell’s Jackson Hole Speech has been defined by a clear theme: skepticism around the artificial intelligence supercycle. From an MIT study doubting the effectiveness of enterprise AI to OpenAI’s Sam Altman warning of a bubble to Meta announcing an AI hiring freeze, those few traders who aren’t on vacation at the end of August find themselves reducing exposure to 2025’s top performers. On the data front, the news hasn’t been promising either: weekly U.S. jobless claims had their largest weekly increase in three months, while continuing claims hit their highest since November 2021.
| Symbol: Equities | Daily Change |
| /ESU5 | -0.43% |
| /NQU5 | -0.45% |
| /RTYU5 | -0.66% |
| /YMU5 | -0.41% |
S&P 500 futures (/ESU5) fell Thursday morning, putting prices on track for a fourth day of losses as investors take profits following the index hitting record highs. Technology stocks and semiconductors continued to weigh on sentiment, with investors fearing that a pullback in investment for data centers and artificial intelligence could limit the enthusiasm for the sector. Walmart (WMT) fell 2% in pre-market trading after the retail giant reported a miss on profits in its second quarter earnings. Zoom (ZM) and Ross (ROST) are scheduled to report after the close.
| Strategy: (36DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 6050 p Short 6100 p Short 6700 c Long 6750 c | 62% | +537.50 | -1962.50 |
| Short Strangle | Short 6100 p Short 6700 c | 68% | +2425 | x |
| Short Put Vertical | Long 6050 p Short 6100 p | 86% | +250 | -2250 |
| Symbol: Bonds | Daily Change |
| /ZTU5 | -0.03% |
| /ZFU5 | -0.08% |
| /ZNU5 | -0.11% |
| /ZBU5 | -0.22% |
| /UBU5 | -0.24% |
Yields moved higher Thursday, with 10-year T-Note futures dropping about 0.11% in early trading. Rate traders are pricing in about an 80% chance that the Fed will cut interest rates at next month’s meeting. The FOMC minutes showed there are growing concerns about inflation as tariff effects start to show up in the data. Federal Reserve Chair Jerome Powell will deliver a speech tomorrow from Jackson Hole, which could inject some volatility into the bond market.
| Strategy (36DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 108.5 p Short 110 p Short 113.5 c Long 115 c | 65% | +250 | -1250 |
| Short Strangle | Short 110 p Short 113.5 c | 68% | +375 | x |
| Short Put Vertical | Long 108.5 p Short 110 p | 86% | +109.38 | -1390.63 |
| Symbol: Metals | Daily Change |
| /GCZ5 | -0.14% |
| /SIU5 | +0.48% |
| /HGU5 | -0.36% |
Gold prices meandered sideways Thursday morning after prices rose from three-week lows yesterday. Prices failed to clear the 9-day exponential moving average (EMA), a level that has capped upside price action over the past week. A stronger dollar and higher yields are dampening sentiment for the metal. Tomorrow’s speech from Mr. Powell is under close watch for precious metal traders. The FOMC Minutes, which showed that policymakers were still comfortable with holding rates steady, also weighed on the metal.
| Strategy (68DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 3200 p Short 3225 p Short 3575 c Long 3600 c | 59% | +860 | -1640 |
| Short Strangle | Short 3225 p Short 3575 c | 68% | +4980 | x |
| Short Put Vertical | Long 3200 p Short 3225 p | 81% | +470 | -2030 |
| Symbol: Energy | Daily Change |
| /CLV5 | +0.02% |
| /HOU5 | -0.04% |
| /NGU5 | +1.45% |
| /RBU5 | +0.41% |
Crude oil prices (/CLV5) failed to hold their gains yesterday, with an intraday move above the 9-day EMA being defeated through the trading day. Prices remain sharply lower from the start of the month, with expectations that a peace deal could be made between Russia and Ukraine. However, uncertainty over the negotiations is now rising, casting doubt on the potential that Russian crude could return to the global market. Still, crude oil traders remain slightly hopeful, as prices haven’t recovered much from the monthly low traded at last week.
| Strategy (56DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 54 p Short 55 p Short 71 c Long 72 c | 65% | +220 | -780 |
| Short Strangle | Short 55 p Short 71 c | 71% | +1350 | x |
| Short Put Vertical | Long 54 p Short 55 p | 81% | +130 | -870 |
| Symbol: FX | Daily Change |
| /6AU5 | -0.17% |
| /6BU5 | -0.05% |
| /6CU5 | -0.17% |
| /6EU5 | -0.08% |
| /6JU5 | -0.37% |
Traders are paying less attention to U.S. data than they are the push higher in U.S. Treasury yields, which the U.S. Dollar ($DXY) has been following all week. To that end, the greenback remains largely rangebound, as choppy action in yields has kept FX markets in check over the past few days. The Euro (/6EU5) has barely moved in two weeks, but volatility remains with an IVR near 40; the Canadian Dollar (/6CU5) has the highest IVR among the FX futures, clocking in at 58.2 at the time of writing.
| Strategy (43DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 1.13 p Short 1.14 p Short 1.2 c Long 1.21 c | 67% | +275 | -975 |
| Short Strangle | Short 1.14 p Short 1.2 c | 72% | +662.50 | x |
| Short Put Vertical | Long 1.13 p Short 1.14 p | 90% | +112.50 | -1137.50 |
Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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