The US stock markets finished on a positive note, with the S&P and NASDAQ hitting new highs. The Dow industrial average rose by 192.40 points or 0.43%, closing at 44,650.70. The S&P gained 17.14 points or 0.27%, ending at 6,280.40. The NASDAQ was up by 19.33 points or 0.09%, finishing at 20,630.66, continuing its strong performance. The Russell 2000, which tracks small-cap stocks, increased by 10.92 points or 0.48%, reaching 2,263.41. Nvidia’s stock crossed the $4 trillion market cap, closing at $164.10, despite upcoming 50% tariffs on imports from Brazil and copper starting August 1. Airline stocks saw significant gains. United Airlines Holdings jumped 14.37%, American Airlines rose by 12.80%, and Delta Air Lines increased by 12.01%. Tesla’s shares also rose by 4.73% after a petition for robo-taxis in Phoenix. Other notable gains were seen in Moderna, Robinhood Markets, AMD, SoFi Technologies, Dollar Tree, Synopsys, Alibaba ADR, and American Express, with increases ranging from 2.53% to 4.57%.

Sector Specific Movement

Yesterday, large-cap tech and travel stocks performed well, driven by strong equity indices and speculative interest. In India, Modi’s government firmed up its position, while the European Central Bank made expected announcements. Trading activity was more influenced by sector-specific movements than broader economic news. Large-cap tech companies, especially those in semiconductors expanding into artificial intelligence, continue to be market leaders. Nvidia’s rise past $4 trillion was noteworthy, but the underlying constant support from institutional investments reflects high-margin growth. Despite high valuations, these stocks are likely to remain strong unless the Fed signals major policy changes. Airline stocks have seen increased interest following better-than-expected forward booking data, which becomes increasingly crucial as quarterly earnings approach in July. Mixed bond yields did not create pressure for riskier trades, allowing growth stocks to thrive. Potential upcoming tariffs, including the 50% on certain imports, typically harm stocks most affected by global supply chains. However, the limited market response suggests that this risk is already factored into pricing or that central bank actions abroad may mitigate negative impacts.

Impact On Derivatives Markets

Monitoring the derivatives markets, especially the weekly expirations in large index options, reveals that sharp single-day movements in high-beta stocks are quickly changing short-gamma exposure. We’re adjusting our hedges sooner than in previous quarters. While volatility remains stable, intraday fluctuations are becoming more significant than closing values. Traders with short-dated contracts should reconsider their assumptions about time decay, as the market currently favors directional trades over neutral ones. As attention shifts back to economic indicators later this month, including upcoming CPI prints, the effective near-term strategy is to ride the momentum in stocks with active headlines. These include high-frequency chip companies, consumer finance firms benefitting from retail credit growth, and platforms exploring new ad revenue sources. Defensive sectors may lag unless speculation about rate cuts resurfaces. Until then, strategies focused on liquidity-adjusted delta risk will likely offer a significant advantage in a market that leans more towards optimism than fear. Create your live VT Markets account and start trading now.

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