S&P and NASDAQ reach record highs, while Dow and Russell 2000 decline
by VT Markets
/
Jul 21, 2025
The S&P and NASDAQ indices hit record highs, with the S&P gaining 8.81 points, or 0.14%, to close at 6305.60. The NASDAQ rose by 78.52 points, or 0.3%, ending the day at 20974.17.
On the other hand, the Dow Jones Industrial Average dipped slightly by 19.12 points, or 0.04%, finishing at 44323.07. The small-cap Russell 2000 also fell, dropping 8.87 points, or 0.40%, to close at 2231.13.
Intraday Trading Highlights
During the trading day, both the S&P and NASDAQ set new records. The S&P climbed to 6336.08, while the NASDAQ reached 21077.37 before retreating.
According to Michalowski, these record closes highlight significant momentum mainly in large-cap technology stocks. The strength of the NASDAQ indicates a continued positive outlook on the tech sector. Derivative traders might want to buy call options or set up bull call spreads on tech-focused ETFs to take advantage of this upward trend.
However, the drop in the Dow and the Russell 2000 shows a concerning split in the market. This limited leadership could be a warning sign, as recent data indicates that the top 10 S&P 500 companies account for over 35% of the index’s weight. This historic concentration suggests that the rally may not be well-supported and could be unstable.
Hedging and Market Strategies
Given this market split, implementing hedging strategies is wise. With the CBOE Volatility Index (VIX) recently at low levels around 13, protective put options are relatively cheap. We recommend buying puts on the Russell 2000 ETF (IWM) as a cost-effective way to guard against a potential downturn if weakness spreads beyond small-cap stocks.
Historically, market tops often show a narrow breadth, much like what happened in late 1999 before a significant correction. Traders should stay alert and ready for a possible rise in volatility. Upcoming inflation reports and employment data will be crucial factors that could confirm the current highs or lead to a pullback.
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by VT Markets
Jul 21, 2025
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