$5 Trillion "Triple Witching Day" Sees Record Volume! Just Now, U.S. Stock Trading Volume Hits "Third Highest in History"

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Against the backdrop of the Federal Reserve signaling continued monetary easing, an unusually busy trading day driven by massive options expirations pushed U.S. stocks to fresh record highs.

On Friday, trading volume on U.S. stock exchanges surged to about 27.7 billion shares, the third-highest single-day volume since Bloomberg began compiling the data in 2008. This surge coincided with a record $5 trillion in stock options and futures expiring, also known as "triple witching day."

Fueled by massive trading activity, Wall Street stocks reached new highs again. The S&P 500 index temporarily broke through 6,660 points, led by technology stocks. Since its low in April, the index's market capitalization has grown by nearly $15 trillion. However, the Russell 2000 index, which tracks small-cap companies, retreated from record highs.

(Intraday performance of the U.S. stock benchmark index)

The core driver pushing the market higher is the Federal Reserve's renewed interest rate cuts this week. Fed Chair Powell stated that committee members will make rate decisions meeting by meeting, but swap market data indicates that traders are still betting on nearly two rate cuts in 2025.

Optimistic Market Sentiment but Divergences Remain

Analysts generally believe that the Fed's moves have set a bullish tone for the stock market.

Craig Johnson of Piper Sandler expects the market to continue rising after a brief consolidation. Bank of America strategist Michael Hartnett also points out that the rally in large U.S. tech stocks over the past two years still has room to run, and investors should be prepared for further gains.

Capital flows also confirm this: according to data from Bank of America citing EPFR Global, both global and U.S. equity funds recorded their largest single-week inflows since last December during the week ending September 17.

However, there are still some cautious voices in the market. Mark Hackett of Nationwide pointed out that the S&P 500’s current forward P/E ratio is 22 times, volatility is subdued, and “a period of consolidation or fluctuation would be normal and healthy.”

David Lebovitz of J.P. Morgan Asset Management also said that with indexes near record highs, spreads near historical lows, and valuations generally high, whether investors should feel nervous is an important issue.

Interestingly, according to a survey by the American Association of Individual Investors (AAII), the number of bears has surpassed bulls for the seventh consecutive week, indicating a divergence between some investor sentiment and the market’s performance.

Corporate Earnings Outlook Provides Support

A positive outlook for the upcoming earnings season is also providing momentum for the stock rally.

Data shows that of the S&P 500 companies that have provided third-quarter guidance, over 22% expect to exceed analysts' estimates, the highest proportion in the past year.

Additionally, the proportion of companies issuing earnings forecasts below expectations has fallen to its lowest level in four quarters.

David Lebovitz of J.P. Morgan commented: “Elevated stock valuations reflect still-solid fundamentals,” which gives them confidence to maintain a moderate overweight in equities.

Ulrike Hoffmann-Burchardi of UBS Global Wealth Management stated:

In non-recessionary environments, Fed rate cut cycles have historically helped support the stock market. We see stocks rising further, supported by AI, corporate earnings, and consumption.

Risk Warning and DisclaimerThe market involves risks, and investments require caution. This article does not constitute personal investment advice and does not take into account any individual user's specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their specific circumstances. Investing accordingly is at your own risk. ```