Dow Jones futures slipped 0.03% to around 49,550 during European trading on Tuesday. S&P 500 and Nasdaq 100 futures fell 0.16% and 0.48%, to about 6,850 and 24,700.
US index futures edged lower as risk appetite weakened, extending last week’s decline tied to worries about AI-driven disruption. Software stocks led the drop, while semiconductor shares held up better on hopes that demand for high-performance computing and advanced chips will stay strong.
Fed Minutes In Focus
Markets remained cautious ahead of the Federal Open Market Committee meeting minutes due on Wednesday. Softer January US Consumer Price Index data and a steady labour market kept expectations for rate cuts later this year intact.
The CME Group’s FedWatch tool shows a 52.7% chance of a 25-basis-point cut in June and 42.7% in July. Traders are also watching earnings later this week from Walmart, Warner Bros. Discovery, and Booking Holdings.
Key data due on Friday include Q4 annualised Gross Domestic Product and the core Personal Consumption Expenditures price index. These reports may shape expectations for the Fed’s next moves.
With futures pulling back, the week is starting on a cautious note. One approach is to consider protective put options on broad indices like the SPX or QQQ to hedge against further downside. A simple idea is to buy near-term puts to benefit from short-term fear ahead of major economic releases.
Options Strategies To Consider
The gap between software and semiconductor stocks is creating a potential pairs-trade setup. This pattern built through 2025, with semiconductor ETFs consistently beating software-focused funds by a wide margin. One way to express this view is to buy call options on a semiconductor index while also buying put options on a software index, aiming to capture continued divergence.
Uncertainty about the Fed’s next step is lifting short-term volatility. The VIX has recently moved above 15. With the market split between a June and July cut, option premiums on index ETFs are higher than usual. If you expect prices to stay in a range after the FOMC minutes, selling premium could make sense—for example, using an iron condor on the SPY.
Upcoming earnings from names like Walmart also create event-driven opportunities. Historically, Walmart can move about 4–5% after earnings, so a straddle could be a way to trade that expected volatility in either direction. Friday’s core PCE data will also be important, since a surprise reading could quickly change the current rate-cut odds.
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