(Reuters) -Major U.S. exchange operators are set to report a solid third quarter as robust trading in equities and options lifts volumes, a surge that has prompted some analysts to question whether parts of the market are in a bubble.

Worries about overheating in AI-linked stocks kept traders rotating in and out of stocks as they weighed potential winners and losers. Hedging and sector rotations are driving surges in trading volumes, analysts said, as investors shift positions to manage risk and chase market trends.

"The market has shown a high tolerance for chaos with a strong ethos of buying the dip," said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.

"Underneath the surface, earnings growth is grinding forward, consumer spending is resilient as Halloween sales are expected to hit new records, and credit markets aren't screaming mayday yet, but we are watchful."

THE CONTEXT

Uncertainty over the Federal Reserve's next policy moves kept investors active across stocks and derivatives in the third quarter, driving demand for hedging and portfolio adjustments.

Those concerns are expected to linger through the rest of the year and into 2026, with the U.S. government shutdown now in its third week.

Energy markets were quieter after several quarters of being a key driver of trading activity. Jefferies analysts said overall activity was "lighter" in the quarter, with both energy and interest-rate volumes lagging.

At Intercontinental Exchange, owner of the New York Stock Exchange, activity in equities and derivatives is expected to help offset weaker energy volumes.

"ICE's third-quarter energy futures and options activity has been weaker than in recent quarters with oil price volatility (Brent contract) falling towards its lowest levels in 18 months," said GimmeCredit analyst Jay Cushing.

THE FUNDAMENTALS

* Nasdaq and ICE are expected to see higher revenue thanks to growth in equities and options trading in the quarter, according to estimates compiled by LSEG.

* CME, the world's largest derivatives marketplace, average daily volume slipped about 10.6% to 25.3 million contracts in third quarter

* Cboe's S&P 500 index options, hit a quarterly record of 3.9 million contracts

WALL STREET SENTIMENT

Nasdaq and CME will kick off the U.S. exchange earnings season this week, while ICE and Cboe are scheduled to report later this month.

Company Q3'25 EPS estimate Q3'24 EPS

Nasdaq $0.85 $0.74

CBOE $2.49 $2.22

CME $2.64 $2.68

Intercontinental $1.61 $1.55

Exchange

** Source: LSEG

STOCK PERFORMANCE