US stock indices saw a strong rise, each up by over 1.1%. The Russell 2000 led the way with a 2.99% increase, its largest single-day gain since May. Both the S&P and NASDAQ set record highs, closing near their daily peaks. Here are the closing figures: – Dow Industrial Average: up 483.52 points (1.10%) at 44,458.61 – S&P Index: up 72.31 points (1.13%) at 6,445.76 – NASDAQ Index: up 296.50 points (1.39%) at 21,681.90 – Russell 2000: up 66.26 points (2.99%) at 2,282.77

Market Reactions and Predictions

The Consumer Price Index met expectations, keeping hopes high for a possible rate cut in September. Markets predict around 60 basis points of cuts by the end of the year. US airline stocks rose sharply after airfare prices increased by 4% in July, the first rise in six months. This suggests airlines are gaining stronger pricing power as they adjust capacity due to lower demand. American Airlines gained 12.22%, United Airlines 10.19%, Delta Air Lines 9.23%, and Southwest Airlines 5.73%. While major indices reach new records, the nearly 3% jump in the Russell 2000 is notable. It indicates that the market rally is expanding beyond just large-cap stocks, signaling increasing investor risk appetite. Inflation isn’t slowing progress, as the July Consumer Price Index stood at a manageable 3.1% year-over-year. This has reinforced expectations for monetary easing, with the CME FedWatch tool showing an over 85% chance of a rate cut in September. Traders are positioning for lower rates to keep driving asset prices up through the year.

Market Strategy Insights

With the market at new highs, the CBOE Volatility Index (VIX) has dropped below 13, indicating low market fear. For derivative traders, this environment makes it appealing to sell premium, such as out-of-the-money put options on strong indices like the S&P 500. This strategy can benefit from market gains and time decay. The airline sector is notably strong after the first airfare hike in six months. The U.S. Global Jets ETF (JETS) experienced its highest trading volume in three months, indicating solid institutional interest. It’s wise to consider bullish positions, like buying call options on strong companies like Delta or United, to take advantage of this renewed momentum. Previously, the Russell 2000 lagged behind the NASDAQ in the first half of 2025, making today’s rise especially significant. This could indicate the start of a shift towards smaller, more domestically-focused companies that have been underperforming. Buying call spreads on the IWM ETF might be a good way to leverage this potential catch-up over the coming weeks. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now