Stocks are having a nice rally early Thursday, but the market may struggle to add to gains the rest of the day and Friday because of an unusual culprit posed by one market analyst: The NCAA men’s basketball tournament.
The so-called March Madness college basketball tournament kicked off at 12:15 p.m. ET Thursday. It is so popular with the Wall Street crowd that it will slow trading volumes and keep stock market prices in check as distracted traders look to make fewer bold moves, according to Jeremy Klein, chief market strategist at FBN Securities.
“Tomorrow’s ‘triple witch’ expiration and the start of the NCAA Men’s Basketball Tournament may keep the S&P 500 glued to 2750, an important option strike price,” Klein wrote to FBN clients Thursday morning in a note. Triple witch options expiration refers to the expiration on index futures, index options and single stock options, often a day of volatility.
Most traders “are going to turn on the games and lose interest in the market,” Klein said when reached for comment by CNBC.
The S&P 500 entered the week at 2,786.57. It closed at 2,749.48 on Wednesday.
To be sure, many market observers will scoff at a U.S. basketball tournament influencing a deep financial market with millions of global participants, but the tournament has had an effect on the broader economy in the past.
Corporationslost $6.3 billion in unproductive hours last year because of March Madness, according to WalletHub.
A flurry of 32 games will take place Thursday and Friday in the first round of the tournament.
