Tech Sector Gains

Tapestry shares rose by 4.34%, thanks to consumer spending. Intel climbed by 4.05%, driven by trends in the chip industry and AI. Alphabet A gained 3.65% due to strong ad revenue and AI growth. Oracle increased by 3.28% from cloud and AI services, while GameStop went up by 3.07% due to retail interest. The S&P index gained 31 points, or 0.47%, reaching 6,614.69. It briefly touched 6,619.62 but didn’t break any records set by the NASDAQ. Meanwhile, the Dow industrial average fell 48 points, or 0.11%, to 45,787.66 due to losses in companies like Amgen and McDonald’s. The Russell 2000 index rose by 7.69 points, or 0.32%, hitting 2,404.73. The NASDAQ is showing strength while the Dow is declining, creating a noticeable split in the market. This indicates a shift towards high-growth tech stocks, moving away from older industrial companies. Traders should pay attention to this trend, as the momentum is clearly in the tech sector. This tech rally is backed by signs of easing inflation. The August 2025 CPI report showed a 2.9% increase, which is slightly below the expected 3.0%. Traders now think the Federal Reserve will keep rates steady at the next meeting, a scenario that favors growth stocks with long-term earnings. This environment is positive for riskier tech assets.

Market Strategies

The current market behavior is similar to the shift we observed in late 2023 when the Fed hinted it would stop raising rates. Back then, the NASDAQ rose for months while the Dow lagged. History suggests this trend of tech outperforming could continue for several more weeks. Given the strong gains in companies like Tesla and ASML, it makes sense to consider buying near-term call options to take advantage of this momentum. Tesla has surged after an insider buy, and while implied volatility is high, the direction seems strong enough to justify the cost. Selling put credit spreads on leading firms like CrowdStrike could also be a smart way to earn premium while remaining bullish. To guard against market uncertainty, we might focus on the underperforming Dow Jones. Buying puts on an index ETF like DIA or on specific laggards like 3M can help protect our tech investments. This creates a pairs trade that profits from the growing performance gap between the two indices. The strength of retail favorites like GameStop and Chewy indicates a strong appetite for risk among investors right now. This widespread optimism supports aggressive short-term strategies but may also suggest the market is becoming overheated. We should stay flexible with our positions and be ready for potential increases in volatility. Create your live VT Markets account and start trading now.

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