Major U.S. stock indices had a mixed closing, with earlier gains diminishing even after a tariff agreement between the U.S. and EU. The S&P 500 remained nearly the same, while the Dow Jones Industrial Average mostly recorded losses during the session. This upcoming week is full of important economic events, including the FOMC interest rate decision, the U.S. jobs report, and the release of the second-quarter GDP. Investors are staying cautious due to ongoing uncertainty about how the new tariff might affect inflation. Additionally, the earnings season ramps up, with reports expected from Amazon, Apple, Meta, and Microsoft, as well as rate announcements from the Bank of Canada and Bank of Japan.

Market Closing Figures

Here are the final figures: – Dow: down 64.36 points (-0.14%) at 44,837.56 – S&P 500: up 1.13 points (+0.02%) at 6,389.77 – NASDAQ: up 70.27 points (+0.33%) at 21,178.58 – Russell 2000: down 4.34 points (-0.19%) at 2,256.72 Notable stock performances included Super Micro Computer, which rose 10.24% due to excitement around AI and data centers. AMD and ASML also gained after the U.S.-EU trade deal on semiconductors. Nike’s stock improved by 3.89% following a JPMorgan upgrade, and Exxon Mobil jumped 2.62% as crude prices rallied due to tighter supply and sanctions on Russia. With the Federal Reserve’s decision and the U.S. jobs report coming this week, we anticipate significant market fluctuations. The CBOE Volatility Index (VIX) has remained low at around 12, suggesting that options are currently inexpensive. This presents a good chance to prepare for an increase in volatility, perhaps by using straddles on broad market indices.

Focus on Tech Giants

We are keeping an eye on major tech companies reporting this week, including those behind Windows and the iPhone. Historically, these large tech stocks have averaged about a 5% price change after earnings reports over the last eight quarters, presenting clear opportunities for investors who can predict the direction. We will look to capitalize on expected price gaps around these earnings announcements. The semiconductor sector is also in focus, having gained from the recent trade agreement. The VanEck Semiconductor ETF (SMH) is up over 50% this year, showing strong momentum but also raising the risk of a potential pullback. We think using call spreads is a smart way to benefit from further upside in companies like the one run by Su while limiting our maximum risk. Market caution, combined with record cash in money market funds exceeding $6.1 trillion, creates a “coiled spring” effect. We anticipate that a “fear of missing out” could lead to a sharp rise if this week’s economic data turns out positive. With this in mind, we are positioning ourselves with out-of-the-money call options on the NASDAQ 100, which provide leveraged upside with limited capital at risk. Create your live VT Markets account and start trading now.

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