The major US stock indices ended the week with losses. The NASDAQ and Russell indices each dropped more than 2%. Several key factors contributed to this decline: the start of new tariffs on August 1, disappointing jobs data from revisions, the positioning of US nuclear submarines amidst geopolitical tensions, and the firing of the BLS chief over allegations of data manipulation. Here are the specific declines: – The Dow industrial average fell by 542.40 points, or 1.23%, to 43,588.58. – The S&P index dropped 101.38 points, or 1.60%, to 6,238.01. – The NASDAQ index decreased by 472.32 points, or 2.24%, ending at 20,650.13. – The Russell 2000 fell 44.86 points, or 2.03%, to 2,166.78. For the week, the Dow dropped 2.92%, the S&P fell by 2.36%, and the NASDAQ decreased by 2.17%.

Companies That Performed Well

Despite the overall market decline, some companies managed to do well. Corning saw a 12.10% rise after posting strong earnings, and Meta and Microsoft gained by 5.21% and 2.05%, respectively. Next week, earnings reports are due from several major companies, including Berkshire Hathaway, Pfizer, and Disney, which could affect market trends. Given the new tariffs and the weak jobs report, now may be a good time to think about protective puts on key indices like the SPX and QQQ for the coming weeks. The August jobs report showed a net loss of 50,000 jobs after revisions, a stark contrast to an expected gain of 180,000. This marks the first negative print since 2023 and could signal further market declines as recession fears grow. Increased geopolitical tensions, particularly concerning the movement of nuclear submarines, are adding to market worries. The VIX, a gauge of market fear, surged over 25% this week to close above 22, a level we haven’t seen consistently since early 2024 during regional banking stress. Traders might consider VIX call options or volatility-linked ETFs to protect against or profit from potential future market turbulence.

Opportunities In The Defense Sector

This environment is creating opportunities in the defense sector. Companies like Northrop Grumman are already performing well. The iShares U.S. Aerospace & Defense ETF (ITA) has outperformed the S&P 500 by over 8% year-to-date in 2025, and ongoing global tensions could boost that trend. Using call options in this sector might provide upside exposure even if the broader market declines. Despite the sell-off, certain areas like AI and semiconductors are showing impressive strength, with companies like Meta and Super Micro continuing to rise due to robust earnings. This divergence indicates that selling cash-secured puts on reliable tech firms could be a smart strategy, allowing traders to earn premiums during times of elevated fear while potentially acquiring strong assets at lowered prices if the market dips further. With major companies such as Disney, Eli Lilly, and AMD set to report earnings next week, implied volatility is sharply increasing. For instance, implied volatility for Disney’s options suggests a potential price swing of 8% after its announcement, which is significantly higher than its quarterly average. This makes options strategies like straddles or strangles appealing for traders who anticipate significant price movement, even if they aren’t sure about the direction. Create your live VT Markets account and start trading now.

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