S&P Futures Halted by CME Outage Disrupts Trading
December S&P 500 E-Mini futures experienced a disruption on Friday due to a technical outage at the Chicago Mercantile Exchange. Trading for futures and options on the CME, including U.S. Treasuries and equity futures, was halted for several hours. CME Group attributed the issue to a cooling problem at CyrusOne data centers and stated that support was working to resolve the problem.
Market Impact and Trading Halts
The outage significantly impacted trading activity across various asset classes. Trading halts were observed for futures and options on the CME, including U.S. Treasuries and equity futures, alongside commodities and other asset classes. CME Group addressed the situation with a statement indicating that the issue stemmed from a cooling problem at CyrusOne data centers and that support was actively working to resolve the rapid issue.
Sector-Specific Highlights
Several sectors saw notable movements. Robinhood Markets (HOOD) surged over +10% following the announcement of its acquisition of a majority stake in LedgerX, a U.S.-based derivatives exchange, giving it access to prediction markets. Chip stocks like Marvell Technology (MRVL) and Advanced Micro Devices (AMD) also gained ground, while Dell Technologies (DELL) advanced as it raised its full-year revenue guidance. Conversely, Workday (WDAY) slumped over -7% due to disappointing Q3 subscription revenue.
Economic Data Releases and Market Sentiment
Wednesday’s economic data showed U.S. durable goods orders rose +0.5% m/m in September, in line with expectations, and core durable goods orders increased +0.6% m/m, surpassing expectations. The number of Americans filing for initial jobless claims fell by -6K to a 7-month low of 216K, also beating expectations. However, the U.S. Chicago Purchasing Managers’ Index (PMI) fell to 36.3 in November, weaker than anticipated. Ian Lyngen at BMO Capital Markets noted that these data releases reinforced the notion of mixed performance in the real economy, with no immediate threats to the Federal Reserve’s plans for a December rate cut. The Beige Book survey indicated that U.S. economic activity remained largely unchanged in recent weeks, with heightened risks of slower activity in the coming months while some optimism was noted among manufacturers. Employment declined slightly, and prices increased at a moderate pace, further solidifying the expectations for a rate cut.
Federal Reserve Outlook and Bond Yields
The market’s expectations for a December rate cut were largely unchanged, with an 84.7% probability according to futures pricing. The yield on the benchmark 10-year U.S. Treasury note rose to 4.010%. European markets also showed mixed performance; the Euro Stoxx 50 Index was down -0.02% and Japanese stock markets saw gains driven by indications of a possible rate cut.
Concluding Market Assessment
Despite the disruption caused by the trading halt, market sentiment remained cautiously optimistic, largely fueled by the expectation of a Federal Reserve rate cut. The day culminated with momentum from sector-specific data releases and an increased probability of a rate cut, creating a dynamic market environment.
