What’s driving markets?

U.S. stocks opened higher early Friday before turning lower then rebounding in volatile trading that was attributed to “quadruple witching” — the simultaneous expirations of stock-index futures, stock index options, stock options, and single stock futures — which happens once per quarter, according to Joe Saluzzi, co-head of equity trading at Themis Trading.

“It was a bad week, it was a really bad week,” Saluzzi said. “The Federal Reserve certainly didn’t give us any confidence this week…we’re kind of stuck right now.”

Saluzzi told MarketWatch on Friday that the combination of these two factors was weighing on stocks. He speculated that there could be more losses ahead as the Cboe Volatility Index
VIX,
-5.58%,
commonly known as the VIX, stood at 33, still below a reading of 40 which might indicate to some a genuine capitulation by investors.

Investors are still trying to come to grips with Wednesday’s interest-rate hike by the Federal Reserve, the biggest since 1994.

“The inflation dragon needs to be slain and the Federal Reserve is sending signals that it’s on it,” said Scott Knapp, chief market strategist at CUNA Mutual Group in a phone interview Friday. The Fed’s large rate hike this week of three-quarters of a percentage point is “stage-setting for a meaningful slowdown in the economy and markets are adjusting accordingly.”

Markets are facing bruising weekly losses, with the S&P 500 heading for a drop of more than 5%, according to FactSet data, at last check.

See: What the Fed’s biggest rate hike in decades means for the bear market in bonds

A mixed bag of data this week has driven concerns that the U.S. economy is slowing, noted Saxo Bank strategists in a note Friday. Equity traders can’t decide if they should “celebrate weak data as something that will eventually lead U.S. yields lower and see the pace of Fed tightening eventually reversing or fret weak data because of the implications for corporate profits,” they added.

On Friday, investors received the May reading on U.S. industrial output, which came in below expectations but remained in positive territory, indicating a fifth month of growth. Industrial output was “soft,” said CUNA’s Knapp, adding that the economy is “slowing very quickly.”

Read: The U.S. economy is slowing and likely to soften further, leading indicators show

Saxo said the next data points to watch will be preliminary services and manufacturing PMI surveys for June, due next week. U.S. markets will be closed on Monday for the Juneteenth federal holiday.

On Friday morning, investors heard from Chairman Jerome Powell, who delivered opening remarks at the Inaugural Conference on the International Roles of the U.S. Dollar. Powell said the “Fed is ‘acutely focused on returning inflation to our 2% objective,’” but as his remarks mostly were about the role of the dollar as the world’s reserve currency, his comments didn’t offer new insights on the outlook for monetary policy.

Minneapolis Federal Reserve President Neel Kashkari said in a blog post Friday that he could support another rate hike of 75 basis points in July. He wrote that a “prudent strategy” after the July meeting might be to continue with rate hikes of 50 basis points until inflation is “well on its way down” to 2%.

Read: The odds of recession are rising, but the U.S. economy is not doomed to a downturn

What companies are in focus?

• Adobe Inc.
  ADBE,
  +0.15%
  shares rose 0.2% after a revenue guidance tweak.

• Shares of Mereo BioPharma Group
  MREO,
  +71.25%
  climbed 77% to trade at $1.42 after the Times reported, without attribution, that AstraZeneca PLC
  AZN,
  +0.74%

  AZN,
  +1.68%
  is considering a bid for London-based, U.S.-listed biotech.

• Diamondback Energy
  FANG,
  -8.85%
  and Devon Energy
  DVN,
  -8.99%
  were among oil-and-gas companies trading lower as crude prices fell, each down at least 9%.

• The U.S.-listed shares of China-based companies saw gains Friday after Reuters reported that China’s central bank accepted Ant Group’s application to set up a financial holding company. Alibaba
  BABA,
  +0.93%
  shares were up 0.8%

• Revlon shares
  REV,
  +120.45%
  surged nearly 100 % on reports that Indian conglomerate Reliance Industries was moving to buy the troubled cosmetics company.

How are other assets faring?

• The yield on the 10-year Treasury note BX:TMUBMUSD10Y fell 10 basis points to 3.21%, after the biggest two-day drop in three months on Thursday.

• The ICE U.S. Dollar Index 
  DXY,
  +1.01%,
   a measure of the currency against a basket of six major rivals, rose around 1.1% to 104.74, near its highest level in 20 years following Friday’s decision from the Bank of Japan.

• Bitcoin 
  BTCUSD,
  -0.75%
  was down 1.2% at $20,550.

• Oil futures
  CL.1,
  -7.41%
  fell, with West Texas Crude for July delivery down around 7.4% at $106 a barrel. Gold 
  GC00,
  -0.50%
   for August delivery
  GCQ22,
  -0.50%
  slipped 0.5% to settle at $1,840.60 an ounce.

• In European equities, the Stoxx Europe 600 
  SXXP,
  +0.09%
  closed 0.1% higher Friday, but booked a weekly loss of 4.6%. London’s FTSE 100 Index ended 0.4% lower Friday, sliding 4.1% for the week.

• In Asia, the Shanghai Composite 
  SHCOMP,
  +0.96%
  finished 1% higher Friday, booking a 1% gain for the week. The Hang Seng Index 
  HSI,
  +1.10%
  rose 1.1% Friday, paring its losses for the week to about 3.4%. Japan’s Nikkei 225 
  NIK,
  -1.77%
  closed 1.8% lower Friday, bringing its weekly loss to 6.7% .

–Barbara Kollmeyer contributed to this report.