Major U.S. stock indices had mixed results in their latest session. The Dow Industrial Average fell by 316.38 points, or 0.70%, closing at 44,693.91. On the other hand, the S&P 500 rose slightly, increasing by 4.44 points, or 0.07%, to 6,363.35, while the NASDAQ gained 37.94 points, or 0.18%, to finish at 21,057.96. Chip stocks were on the rise. Nvidia increased by 1.72%, Broadcom by 1.77%, and AMD by 2.19%. However, Intel’s performance was less stable. After releasing its earnings after market hours, its shares fell by 3.66%, though it slightly rebounded afterward, trading up nearly 1%.

Market Trends

We are noticing a split in the market, with industrial stocks pulling back and tech-focused indices remaining strong. So far this year, the tech-heavy NASDAQ 100 has risen more than 25%, while the Dow Jones Industrial Average has gained only about 4%. This difference indicates that traders should be careful with broad market investments and instead concentrate on specific sectors. The current mixed signals often lead to increased volatility, even though the CBOE Volatility Index (VIX) has stayed low, hovering around 14-15. This environment may be a good chance to buy protection or make speculative trades at a lower cost. Options strategies that benefit from price swings, like long straddles or strangles, could work well on indices before upcoming economic data releases. In the technology sector, it’s important to choose wisely. The iShares Semiconductor ETF (SOXX) is up more than 40% this year, but individual company performances can vary greatly after earnings reports. We recommend using call spreads on leading companies in the sector to take advantage of potential gains while also managing risk.

Economic Uncertainty

Historically, this type of market shift happens during times of economic uncertainty or changes in Federal Reserve policy. The industrial average’s inability to maintain its record high signals that “old economy” stocks may be more at risk of a slowdown. Therefore, buying protective puts on an industrial-focused ETF could effectively shield our technology investments. Create your live VT Markets account and start trading now.

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