S&P 500 futures rise ahead of options expiration

U.S. stock futures on Friday inched higher, consolidating recent gains ahead of the expiration of key options contracts.

What’s happening

Dow Jones Industrial Average futures
YM00,
+0.25%
rose 75 points, or 0.2%, to 35094.
S&P 500 futures
ES00,
+0.22%
gained 10 points, or 0.2%, to 4533.
Nasdaq 100 futures
NQ00,
+0.00%
increased 13 points, or 0.1%, to 15910.

On Thursday, the Dow Jones Industrial Average
DJIA
fell 46 points, or 0.13%, to 34945, while the S&P 500
SPX
increased 5 points, or 0.12%, to 4508, and the Nasdaq Composite
COMP
gained 10 points, or 0.07%, to 14114.

The S&P 500 is up 2.1% this week, and the small-cap Russell 2000
RUT
has advanced 4%.

What’s driving market

The S&P 500 is only 2% away from its intraday high of the year, powered by optimism of a possible soft landing, as price growth — and economic activity — are cooling. Walmart’s
WMT,
-8.09%
CEO on Thursday said it’s possible the U.S. may be entering a period of deflation, while jobless claims rose.

“The major reason for the recent rally is that Wall Street had convinced itself that the Federal Reserve is all done with hiking rates this cycle. In fact, investors now expect the Fed to start cutting rates in less than six months,” said Eddy Elfenbein, the manager of the CWS AdvisorShares Focused Equity ETF and blogger of Crossing Wall Street.

Options tied to $2.4 trillion in stocks, exchange-traded funds and equity indexes are set to expire on Friday, according to data compiled by Rocky Fishman, founder of Asym50, a provider of analytics about the U.S. options market.

Housing starts data also is set for release, and there are a number of Federal Reserve policymakers set to speak.

There’s also more earnings reports for investors to analyze, with shares of retailer Gap
GPS,
-2.84%
set to rally after it said it didn’t have to discount as much during the third quarter as inventories fell.

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