The Dow Jones Industrial Average hit an intraday record of 50,509.22 and closed at 50,259.81, up 123.57 points (0.25%). The S&P 500 rose 0.47% to 6,964.82, and the Nasdaq Composite gained 0.90% to 23,238.67.
December retail sales were flat month over month at $735 billion. That follows a 0.6% rise in November and came in below the 0.4% forecast. Sales excluding autos were also flat versus a 0.3% forecast, and the control group fell 0.1%.
Market Hedging With Index Puts
Furniture stores and miscellaneous retailers each fell 0.9%, while auto dealers slipped 0.2%. The Employment Cost Index rose 0.7% in Q4, below the 0.8% forecast and the slowest pace since Q3 2020.
Howard Lutnick repeated his view that GDP growth will be above 5% in Q1 2026, and said 6% is possible if rates fall. He pointed to more than 30 projects and $18 trillion in pledged investment. Scott Bessent put growth at 4–5%, while the IMF forecast 2.1% for the year.
Datadog rose 15% and ServiceNow gained 4%. Spotify jumped more than 16% after adding 38 million users, reaching 751 million versus 745 million expected. S&P Global fell about 16% after guiding 2026 EPS to $19.40–$19.65 versus $19.96 expected. Coca-Cola fell more than 4% after guiding 2026 organic sales growth to 4–5%.
TSMC posted January revenue of NT$401.26 billion ($12.71 billion), up 36.8% year over year and 19.8% month over month. Nvidia, AMD, and Broadcom each rose about 1%, while Disney rose more than 2.5%.
Risk Positioning For Volatility
The Dow’s 50-day EMA is 48,744 and its 200-day EMA is 46,314. Stochastics are 77.96/64.48. Support sits at 50,000 and 49,600, with resistance near 50,500.
The market is giving mixed signals, so we need to stay cautious. The Dow is at record highs above 50,000, but the surprise weakness in December 2025 retail sales and employment costs may be an early sign that consumers are slowing down. This could be a good time to protect gains by buying put options on broad market ETFs like DIA or SPY, in case the market pulls back.
Weak data has also pushed up expectations for Federal Reserve rate cuts. The CME FedWatch Tool now shows nearly an 80% chance of three or more cuts in 2026. This is similar to the dovish shift the market priced in during late 2023. To benefit if yields fall, we could look at call options on long-duration Treasury bond ETFs such as TLT.
There is also a big gap between the Commerce Secretary’s upbeat 5–6% GDP growth view and the IMF’s slower 2.1% forecast. This kind of disagreement often leads to more volatility as new data comes in. Buying VIX call options or using index straddles can be one way to position for larger swings.
Not everything is moving up together anymore. Strong software earnings and TSMC’s record revenue suggest AI-related chips still have momentum. At the same time, weak guidance from companies like Coca-Cola and S&P Global points to stress in other areas. One way to trade this split is with pairs trades, such as buying calls on the SOXX semiconductor ETF while also buying puts on the XLP consumer staples ETF.
From a technical view, the Dow looks stretched, and the Stochastic oscillator suggests overbought conditions. That supports a more careful stance in the short term. The 50,000 level is a key psychological support area and may be tested soon. With the index still near its highs, it can make sense to set up these hedges and volatility trades now, before a consolidation or pullback starts.
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