European stock markets dropped today, with France’s CAC facing the biggest decline at 1.7%. Italy’s FTSE MIB fell by 1.32%, while Germany’s DAX decreased by 0.50%. The UK’s FTSE 100 and Spain’s Ibex saw drops of 0.60% and 0.96%, respectively. In the US, markets saw little change as European trading ended. The Dow Jones Industrial Average fell slightly by 16 points (0.03%) to 45,263. The S&P 500 ticked up by 4.42 points (0.07%) to 6,443.06, while the NASDAQ gained 39.83 points (0.18%) to reach 21,489.

Chip Companies Shine

Chip companies had a strong day, with Nvidia’s shares rising by $1.76 to $181.49 ahead of its earnings announcement. Other notable gains included Broadcom (+$3.01), AMD (+$2.07), ASML Holdings (+$4.80), TSMC (+$2.34), and Qualcomm (+$3.40). Apple announced an event for September 9, causing its shares to rise by $0.13 to $227.27, though the stock has fallen by 9.23% this year. The downturn in European markets, particularly in France and Germany, presents a potential buying opportunity in the coming weeks. Eurozone inflation data for July 2025 came in at 2.8%, slightly above expectations, heightening concerns about central bank tightening. The difference from the stable US market suggests that buying puts on an index like the German DAX could be a smart move to protect against further losses. Attention is now on Nvidia’s earnings announcement tomorrow, which will likely influence the entire tech sector. The pre-earnings rally in other chip stocks, such as AMD and Qualcomm, indicates high market expectations. This has raised the implied volatility on Nvidia’s options, suggesting traders expect a significant price movement post-report. Given this situation, a long straddle using options that expire this week could benefit from a big move in either direction. Historically, Nvidia’s stock has moved an average of 9.2% in the session following its earnings over the last eight quarters. A move greater than the cost of the straddle would yield a profit, making this a strategic play on impending volatility.

Market Indecision Ahead

The flat trading in the S&P 500 highlights the overall market indecision leading up to the important report. Many traders are also watching for signals from the central bank’s symposium at Jackson Hole later this week. Last week, US unemployment claims were reported at 225,000, indicating a resilient labor market that allows the Federal Reserve to keep its current stance. There’s also an opportunity brewing in Apple ahead of its September 9 event. The stock’s 9% decline this year is unusual for a market leader, hinting at low expectations for the new product cycle. Buying call spreads that expire in October could be a cost-effective way to prepare for any positive surprises from the announcement, especially if new AI features are introduced. Create your live VT Markets account and start trading now.

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