Cboe Global Markets fell Wednesday, extending big weekly losses, after Morgan Stanley downgraded the stock. CBOE stock had held up much better than the general market during the recent downdraft. Several other exchanges, including CME Group, have also stumbled this week.
Morgan Stanley analyst Michael Cyprys cut Cboe stock to underweight from overweight and reduced the target price to 215 from 256. The stock traded around 214 Wednesday morning.
The same reason that drove the stock higher last month — volatile markets — is now a headwind on Cboe stock.
A faster-than-expected cooling on tariff issues with China helped calm financial markets, easing the volatility that drove trading activity, Morgan Stanley said in note to clients Wednesday.
The combination of tariff de-escalation and better-than-feared outlook for the broad economy "could limit upside to index options volumes on Cboe's derivative exchange, and weigh on the growth outlook and valuation with Cboe's shares trading at a premium to recent years," Cyprys wrote.
Morgan Stanley was bullish on Cboe stock during the tariff sell-off in April, but the fast shift in trade policy meant trimming defensive positioning.
Cboe stock gapped below its 50-day moving average, down 3.1% in midday trading. Shares had climbed as much as 8.8% above the 216.82 buy point of a cup-with-handle base. But that entire gain is now wiped away, following a drop of nearly 8% so far this week. That includes a 4.6% tumble on Monday, as the U.S.-China tariff cuts were announced.
On a weekly chart, CBOE stock briefly topped a 234.37 flat-base buy point, but never closed above it.
While the S&P 500 swooned as much as 21% in April from its Feb. 19 peak, Cboe shares gave back no more than 14% during the early April sell-off. It lost just 2% for the entire month.
The stock held support at the 200-day moving average and remains above that line today. It has a 94 Composite Rating, according to IBD Stock Checkup.
Cboe Stock Peers Also Fall
Other exchange operators are down this week, too.
Intercontinental Exchange, the parent company of the New York Stock Exchange, dropped 2.7% Monday and has fallen each day this week. It had recovered from a 17% tumble in late March and early April, hitting a record high last Friday.
CME stock also slid Monday, a nearly 5% drop. The futures and options exchange is down roughly 6% so far this week and trying to hold above the 10-week moving average. Morgan Stanley has an overweight rating on the stock, which it expects to benefit from interest-rate volatility.
Tradeweb Markets, which runs bond and other trading platforms, slid 4% Monday in heavy volume. Shares are near the 140.48 buy point from a breakout on March 17, but had fallen as much as 15% from that entry. On a weekly chart, Tradeweb has a V-shape base with a 152.65 buy point, with a possible handle developing.
Virtu Financial, which provides execution and other services for financial markets, reversed lower Monday from a record high. Shares remain above the 40.41 entry from a double-bottom base.
Nasdaq is still up 2.5% this week, edging lower Wednesday. It is recovering from a 23% decline earlier in the year and is above the 78.40 buy point of a double-bottom pattern.
MarketAxess, which provides trading services to institutional investors and broker-dealers, is down more than 8% this week and is trading below the 50-day line.
