Major U.S. stock indices finished the day close to their highest levels, almost reversing recent losses. The Dow rose by 585.06 points, or 1.34%, closing at 44,173.64. The S&P index gained 91.93 points, or 1.47%, to reach 6,329.94. The NASDAQ jumped 403.45 points, or 1.95%, ending at 21,053.58. The Russell 2000 also went up by 45.52 points, or 2.10%, closing at 2,212.30. The NASDAQ ended above its 100-hour moving average, a positive sign, raising hopes of revisiting last week’s peak. The S&P index finished just below its Thursday closing level and missed surpassing its 100-hour moving average by less than $0.40. Many will watch tomorrow to see if the S&P can break through the 100-hour moving average or if it will dip after today’s gains.

Green Light For Optimism In The Tech Sector

With the NASDAQ above its 100-hour moving average, there is cautious optimism in the tech sector. Traders might consider buying near-term call options on major tech indices like the QQQ, hoping today’s momentum continues. The important factor will be whether the index can maintain this level in the next trading session. The S&P 500 shows a more uncertain situation, closing just shy of its own 100-hour moving average. This uncertainty suggests that traders could set up straddles or strangles to profit from a big move in either direction. A confirmed break above this level would signal a good opportunity to buy SPY options or ES futures. Today’s strong rebound likely reflects a delayed positive response to last Friday’s jobs report. The July Non-Farm Payrolls showed 195,000 jobs added, indicating a cooling but still healthy labor market. This helps ease fears of an overly aggressive Federal Reserve.

Inflation Data Supports Market Action

Today’s market movement is also backed by mid-July 2025 inflation data. The latest Consumer Price Index (CPI) report revealed core inflation has dropped to an annual rate of 2.8%, the lowest since late 2023. This trend supports the idea that the Fed’s rate hiking cycle is behind us. As a result of today’s rally, the CBOE Volatility Index (VIX) fell over 10%, closing near 14.5. With lower implied volatility, buying options is now cheaper for traders looking to make directional bets. However, reduced premiums make selling options strategies, like iron condors, less appealing. We witnessed a similar market pattern in the summer of 2024 when a rapid sell-off was quickly reversed, followed by a steady rise to new highs. History shows that such strong dip-buying often leads to further market strength. Traders should watch for rising volume to confirm this bullish trend. Create your live VT Markets account and start trading now.

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