The Dow Jones Industrial Average rose by more than 200 points on Friday, following a week of market uncertainty. The much-anticipated tariffs from US President Donald Trump have led to mixed opinions, leaving investors unsure about future effects. Even though the Dow has come close to record highs, it’s finding it hard to keep moving upward and is currently around 44,000. A key support level is at the 50-day EMA, just above 43,700, while the RSI sits neutral around 50.00.

Trump’s Tariff Policy

Trump has proposed a 100% tariff on imported semiconductor microchips, which could be avoided by companies that manufacture in the US. Tech giants, especially Apple, have committed to increasing their investments in US manufacturing. Consequently, Apple’s stock rose by 4.5% on Friday. Gold prices surged past $3,400 per ounce due to fears about tariffs on imported gold bars. The effects of pre-tariff sales from April to August are also being evaluated. The monthly Consumer Price Index (CPI) shows trends in inflation and buying behavior. The Federal Reserve aims to keep prices stable and maintain full employment, targeting a 2% yearly inflation rate. Supply-chain troubles have pushed CPI to multi-decade highs, leading the Fed to think about strong actions.

Stalling Dow Jones and Market Uncertainty

With the Dow near 44,000 and the Relative Strength Index at a neutral 50, the market is showing major uncertainty. We might want to consider strategies that can benefit from increasing volatility, like buying call options on the VIX. In similar trade disputes from 2018, the VIX jumped over 40% in just one week, and the current situation feels quite similar. The proposed 100% tariff on semiconductor microchips creates a clear divide in the tech industry. There’s a chance for pairs trading: buy call options on companies with strong US manufacturing and put options on those that rely heavily on imports from Asia. Recent industry reports for Q2 2025 indicate a 15% rise in capital spending for US manufacturers, confirming this trend is already happening. Apple’s 4.5% stock price increase due to its commitment may be overly optimistic for the near term. Changing a supply chain of this scale takes years. Logistics reports from 2024 revealed that over 90% of Apple’s key product assembly still occurred in China. We could use this situation to sell covered calls on Apple stock, allowing us to earn income from the higher premiums while we await a more realistic timeline. Gold’s rise above $3,400 an ounce directly relates to tariff fears and rising inflation. We should take advantage of this momentum by buying call options on gold futures or ETFs, especially since consumer sentiment surveys from July 2025 indicate inflation is now the top worry for households. However, we need to keep an eye on the U.S. Dollar Index, which has strengthened to a 12-month high of 107, as a strong dollar could limit gold’s growth. The high CPI reading puts a lot of pressure on the Federal Reserve to take decisive action. The chance of a 50-basis-point interest rate hike in September 2025 has now increased to over 85%, based on the latest data from the CME FedWatch tool. Therefore, we should consider buying protective put options on sectors sensitive to rate changes, such as real estate investment trusts (REITs) and high-growth tech stocks, which could be affected by tighter monetary policies. Create your live VT Markets account and start trading now.

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