* U.S. stock indexes red; transports, chips down most
* Energy biggest loser among major S&P sectors; utilities up most
* STOXX ends down ~0.3%
* Dollar, bitcoin, crude edge higher; gold dips
* U.S. 10-yr Treasury yield ~1.31%
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NOT YOUR GAMMA'S MARKET (1201 EDT/1601 GMT)
The July options expiration on Friday will change the market landscape and could clear the way for potentially wilder stock market gyrations, according to SpotGamma, a financial insights company specializing in options.
Nearly a third of Nasdaq 100 Triple Qs , SPDR S&P 500 ETF Trust iShares Russell 2000 ETF gamma and about a quarter of S&P 500 gamma is set to expire on Friday, SpotGamma estimates.
Options dealers are considered long or short gamma depending on whether they have bought or sold options. On expiration days, lapsing options tend to change the market picture as dealers' influence on the market is diminished.
When dealers are long S&P 500 Index gamma, rising stocks lead them to sell equities or futures, while a falling index would lead them to buy stocks or futures. This tends to dampen volatility since options dealer activity is counter to the market.
Conversely, under short gamma conditions, a falling market causes dealers to sell stocks and futures, while in rising markets they buy equities and futures, thereby exacerbating the market move.
"As per usual we think this all equates to higher volatility next week," SpotGamma founder Brent Kochuba, said in a note, referring to Friday's options expiration.
Kochuba, sees 4,345 on the S&P 500 as the "vol trigger" mark - a level where in a falling market long gamma positions switch to short gamma.
"As long as the SPX remains above the "vol trigger" it's “party on”," Kochuba said.
(Saqib Ahmed)
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RETAIL SALES, UMICH: INFLATION HARSHES THE BUZZ (1110 EDT/1410 GMT)
Market participants cruised into the weekend with a mixed bag of economic data riding shotgun and the summer's biggest hit - 'The Inflation Shuffle' by Powell and the Feds - blaring on the radio.
The good news is that receipts at U.S. retailers unexpectedly increased by 0.6% last month, according to the Commerce Department in a partial rebound from May's downwardly-revised 1.7% drop.
Analysts expected that drop to be extended by 0.4%.
The upside was constrained by the global chip shortage, which has thrown a monkey wrench into auto sales. Excluding cars, retails sales jumped by a more vigorous 1.3%.
With the exception of food and beverage services, the data set consists mainly of goods.
And as freshly jabbed consumers economically re-engage, demand is shifting from goods back to services, particularly customer-facing industries such as travel, leisure and entertainment.
"The great spending rotation saw households cut back on furniture, autos, sporting equipment and building material – categories that outperformed during the pandemic – while spending more freely at restaurants and bars, gas stations and electronic stores," writes Gregory Daco, chief U.S. economist at Oxford Economics.
But Alex Pelle, U.S. economist at Mizuho Securities, isn't quite as enthusiastic.
"On a real — that is inflation-adjusted — basis, retail sales are contracting for the third consecutive month," Pelle notes. "More spending is being captured by price increases instead of volume increases."
Core retail sales - which strips out autos, gasoline, building supplies and food services - saw a more robust rebound, bouncing to a 1.1% gain from last month's 1.4% contraction.
Core retail sales is closely related to the personal expenditures segment of GDP.
But enough about last month. Now it's July, and inflation is still a thing.
Consumers' near-term inflation expectations jumped 0.6 percentage points to 4.8%, helping to sour the overall mood.
In July, the University of Michigan's preliminary take on consumer sentiment unexpectedly dipped to a reading of 80.8 as opposed to the slight uptick to the consensus 86.5.
"Consumers' complaints about rising prices on homes, vehicles, and household durables has reached an all-time record," noted survey director Richard Curtin.
The expiration of enhanced unemployment benefits might have also played a supporting role.
"We’re guessing that the ending of enhanced unemployment benefits - announced or actual - in 26 Republican-led states has triggered an adverse reaction among consumers," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "People don’t like having money taken away from them."
Both 'current conditions' and 'expectations' components deteriorated.
Finally, another report from the Commerce Department showed unsold goods in the store rooms of U.S. businesses increased by 0.5% in May, inline with economist forecasts.
The gain builds on April's scant, though upwardly revised 0.1% growth.
The increase, however slight, bodes well for second-quarter GDP - the first glimpse of which is expected late in the month - as private inventories detracted 2.7 percentage points from the first quarter's net 6.4% quarterly annualized advance.
Wall Street reversed earlier gains, and by late morning trading all three major U.S. stock indexes were red, with chips
and transports seeing the worst of it.
(Stephen Culp)
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U.S. STOCKS OPEN WITH GAINS AFTER RETAIL SALES DATA (0941 EDT/1341 GMT)
Equities are modestly higher in the early portion of trading on Wall Street, led by tech to the upside while the recent weakness in the materials sector continues as the group is on track for its first weekly decline in four.
Retail sales for July were much stronger than expected, increasing by 0.6% versus expectations calling for a decline of 0.4%. A further look at the consumer is on deck in the form of the University of Michigan's preliminary July reading of consumer sentiment.
Below is your market snapshot:
(Chuck Mikolajczak)
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FOR FRIDAY'S LIVE MARKETS' POSTS PRIOR TO 0905 EDT/1305 GMT - CLICK HERE:
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