By Mark DeCambre and Chris Matthews, MarketWatch

Quadruple witching day on Wall Street

U.S. stocks edged mostly higher midday Friday, with the Dow and S&P just shy of all-time highs as investors looked beyond a litany of central-bank decisions of the past week and focused on signs of improving China-U.S. trade developments.

Traders were also on the watch for any effects of "quadruple witching day" on Wall Street, the simultaneous quarterly expiration of stock-index futures contracts, single-stock futures, and options on stock-index futures and individual stocks, which often spurs higher volumes.

The S&P 500 index remains within 1% of its July 26 closing record but the Nasdaq Composite slipped as Netflix Inc. weighed on the technology heavy gauge.

How are markets performing?

The Dow Jones Industrial Average rose 37 points, or 0.1%, at 27,131, the S&P 500 index rose 2 points, or 0.1%, to 3,009, while the Nasdaq Composite Index fell 20 points to reach 8,162, a decline of 0.3%.

On Thursday (http://www.marketwatch.com/story/dow-set-to-edge-lower-as-wall-street-weighs-feds-monetary-policy-path-2019-09-19), the Dow fell 52.29 points, or 0.2%, to end at 27,094.79, while the S&P 500 index clung to a gain of 0.09 point, or less than 0.1%, to close at 3,006.82. The Nasdaq Composite Index added 5.49 points, or 0.1%, finishing at 8,182.88. The S&P 500 traded as high as 3,021.99 earlier Thursday -- within striking distance of its all-time closing high of 3,025.86 set on July 26.

What's driving the market?

Wall Street stocks were trending upward to end the week, with reports that President Donald Trump was exempting hundreds of Chinese products from tariffs. (https://www.foxbusiness.com/economy/trade-war-us-exempts-more-than-400-chinese-goods-from-tariffs)

The exemptions also come as lower-level Washington and Beijing delegates are meeting for a second day to set the stage for more substantive tariff talks in early October. Two negotiating sessions over the two days will cover agricultural issues, while just one will be devoted to the strengthening of China's intellectual protections and forced transfer of U.S. technology to Chinese firms, Reuters reported (https://www.reuters.com/article/us-usa-trade-china/u-s-chinese-trade-deputies-face-off-in-washington-amid-deep-differences-idUSKBN1W40E1). Some of the Chinese delegation will visit US farming regions next week, though China's Global Times and White House adviser Michael Pillsbury expressed caution about the prospects for a deal on Thursday.

In addition to quadruple witching, the S&P 500 index, S&P 400 and Sox Semi index will rebalance Friday as well.

"Friday should be a massive liquidity day for equities markets due to quad witching and the rebalancing of several major index families, pensions planning to rebalance could use this as a prime opportunity to trade into (or out of) positions ahead of month-end," wrote Dave Lutz, head of ETF Trading at JonesTrading, in a Friday note.

"With the S&P 500 outperforming on both a monthly and quarterly basis versus other asset classes, this results in a current projection of $17 billion in selling of U.S. equities from pension funds," he added.

Investors are also pondering the direction of Federal Reserve monetary policy after a quarter percentage point interest rate cut on Wednesday.

On Friday St. Louis Federal Reserve President James Bullard explained his dissent (http://www.marketwatch.com/story/feds-bullard-dissent-was-due-in-part-to-worries-about-slowing-economy-2019-09-20)from the Federal Open Market Committee's decision on Wednesday to reduce rates, saying he advocated for a more substantial 50 basis-point cut because he thinks the manufacturing sector already appears to be in recession.

Boston Fed President Eric Rosengren, on the other hand, was one of two hawkish dissenters at the recent meeting, and he explained his opposition to rate cuts (https://www.bostonfed.org/news-and-events/press-releases/2019/eric-s-rosengren-dissenting-statement.aspx) in a Friday statement, arguing that additional monetary stimulus would risk inflated asset prices and increased leverage.

"Additional monetary stimulus is not needed for an economy where labor markets are already tight, and risks further inflating the prices of risky assets and encouraging households and firms to take on too much leverage," he wrote.

Fed vice chair Richard Clarida defended this week's interest rate cut (http://www.marketwatch.com/story/feds-clarida-says-us-economy-is-fine-but-global-outlook-is-getting-worse-2019-09-20)on Friday though, arguing that the U.S. economy remains in a good place but the global picture is worsening.

In recent weeks, monetary stimulus by central banks around the world has helped to ease fears about slowing global economic growth, but liquidity remains an issue for U.S. money markets given the deluge of U.S. Treasury borrowing to fund a widening fiscal deficit this year. The New York Fed outlined a schedule on Friday (http://www.marketwatch.com/story/fed-plans-to-conduct-daily-repo-operations-until-october-10-2019-09-20)that would see it conduct daily repurchasing operations through October 10 to provide money market liquidity.

Which stocks are in focus?

Shares of Apple Inc. (AAPL) were up 0.2% Friday morning, as the new iPhone 11 goes on sale for the first time in stores. J.P. Morgan analyst Samik Chatterjee said that healthy preorders (http://www.marketwatch.com/story/apples-stock-gains-with-analysts-upbeat-as-iphone-11-hits-stores-2019-09-20) for the product indicates a "robust" trend for iPhone revenue. The gains led Apple to reclaim a trillion-dollar valuation during early Friday trade.

Netflix Inc. (NFLX) stock fell 5.9%, putting it on track for its third consecutive loss, after falling 2.4% and 1.7% Wednesday and Thursday, respectively. CEO Reed Hastings warned investors at a conference Friday (http://www.marketwatch.com/articles/netflix-stock-slumps-after-its-ceo-warns-tough-competition-is-coming-from-disney-apple-51568993051) that "While we've been competing with many people in the last decade, it's a whole new world starting in November . . . It'll be tough competition."

Shares of McDermott International Inc. (MDR) soared 68% Friday morning, after the energy-services company said it was exploring a sale of its Lummus Technology business (http://www.marketwatch.com/story/mcdermotts-stock-rockets-after-exploring-sale-of-lummus-tech-business-valued-at-over-25-bln-2019-09-20), which has been valued at $2.5 billion. McDermott's market cap sat at 287.1 million as of Thursday's close. The stock plummeted 73% week-to-Thursday's close over concerns that the firm was considering bankruptcy.

How are other markets trading?

In commodities, oil futures rose, with West Texas Intermediate crude for October delivery on the New York Mercantile Exchange rose 1.7%, to trade at about $59 a barrel.

Gold rose 0.3% to trade at about $1,510.9 an ounce, while the U.S. dollar, as measured by the ICE U.S. Dollar Index , a gauge of the buck against a basket of leading rivals, edged 0.3% higher.

The 10-year U.S. note was little changed at 1.773%, while the 2-year fell three basis points to 1.710%.

(END) Dow Jones Newswires

September 20, 2019 11:57 ET (15:57 GMT)