The Dow Jones Industrial Average dropped by 1,750 points, marking its second day of losses. Investors are eagerly awaiting the Federal Reserve’s interest rate decision, which has an 87% chance of leading to a cut. The S&P 500 gained slightly, up 0.1%, while the Nasdaq increased by 0.2%. All eyes are on Federal Reserve Chair Jerome Powell’s comments regarding rates, as markets deal with inflation and economic uncertainty.

Small Caps and Silver Miners Performance

Small cap stocks and silver miners showed strong performance. The Russell 2000 reached a new intraday high. However, other economic indicators were mixed. A stable JOLTS job openings report contrasted with slower hiring and rising inflation worries among small businesses. The Dow Jones Industrial Average tracks 30 major US stocks but has limitations compared to broader indices like the S&P 500. Its changes depend on company earnings, economic data, and Federal Reserve interest rates. Dow Theory, created by Charles Dow, helps identify market trends by comparing the DJIA with the Dow Jones Transportation Average. There are various ways to trade the DJIA, including ETFs, futures contracts, and mutual funds. Joshua Gibson has joined the FXStreet team, bringing his expertise in economics and finance for detailed market analysis. The Orange Juice Newsletter offers daily insights from market experts.

Trader Expectations and Market Strategies

Traders are expecting a quarter-point rate cut from the Federal Reserve today. The main focus will be on Chairman Powell’s guidance. The Dow’s steep drop of 1,750 points suggests unease, even with other indices holding steady. This situation could create opportunities for strategies to benefit from either a sudden market rebound or ongoing volatility. Since the market has already priced in an 87% chance of a rate cut, a classic “sell the news” scenario poses a risk. If Powell hints at this being the last cut for a while, markets could drop further. Traders may want to consider buying short-dated put options on index ETFs like DIA to protect against this potential downturn through December. Recent market fluctuations have led to higher volatility, with the VIX, a measure of market fear, rising above 22 from calmer levels witnessed earlier this fall. This increased volatility makes selling options premiums enticing, yet risky, for those who believe Powell will calm market fears. Well-structured credit spreads could take advantage of a post-announcement drop in volatility. We should also recognize strong areas in the market. The impressive performance of the Russell 2000 and silver futures indicates that targeted bullish strategies could work well. Using call options on ETFs like IWM (for small caps) or SLV (for silver) can help capture gains while managing risk. The recent economic data supports the market’s uncertainty and the Fed’s challenging position. November 2025 data shows headline inflation stubbornly at 3.2% while job growth slowed to 150,000. This conflicting information makes straddles or strangles, which profit from large price changes in either direction, a sensible approach around today’s announcement. According to Dow Theory, we should look for confirmation between indices. While the Dow Jones Industrial Average has weakened, the Dow Jones Transportation Average remains strong, creating uncertainty about the overall trend. We’ll observe if the transports can maintain their strength post-Fed announcement since any breakdown could signal bearish trends. Create your live VT Markets account and start trading now.

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