Thursday: Unsurprising CPI Settles Some Stomachs; Double-Witching a Bit Murky

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Wall Street is calm this midday after yesterday's storm, with the major indices, bellwether bonds and stock-index futures all modestly but steadily higher.

It seems absence of surprise is this rattled market's best friend. Yesterday, a surprise seventh-straight monthly drop in the Producer Price Index buoyed bonds and powered stocks higher early on -- springing the trap on a big trading program at some mist-shrouded firm or firms, which roiled the markets for the rest of the day.

Today, the Consumer Price Index came in precisely in line with expectations, rising 0.2% in both the total and core (excluding food and energy) measures. That may be boring, but the Street will take a little boredom and a little relaxation. The

Dow Jones Industrial Average

and other major indices spiked up sharply at the open and fell back, but they remain in positive territory.

The CPI figures certainly soothed the savage bond market, where the yield on the benchmark 30-year Treasury bond has eased to 6.56%. Out in the futures pits of Chicago, the September contract on the

S&P 500

futures has held on to gains all session after a stomach-turning ride yesterday.

The market's unsettling behavior of recent days has left market mavens uncharacteristically uncertain about the bias for tomorrow's double-witching expiration of equity and index options. The tone usually is clear this close to the event, but this just isn't the usual marketplace.

"I don't know if people have rolled their positions ahead of the expiration already because of all the volatility we've had lately," said Hank Nothnagel, senior vice president of options trading at

Everen Securities

in Chicago. "We really don't have much feel one way or the other. We have pretty decent balance between buyers and sellers. I'd hate to hazard a guess as to how it comes out."

Harrison Roth, senior options strategist at

Cowen

, firmly called a positive bias for the triple-witching expiration back in

June. Now, he's not so sure. "There is a tug of war going on, as you saw yesterday," he said. "It's very difficult to call expirations. Whatever happens on Friday tends historically to be reversed on Monday. I personally think that we're going have a fall -- I could be wrong." He said he based his tentatively negative outlook on the market's tone early in the week, especially in drug, banking and gaming stocks.

This story was orginally published August 14, 1997