Major US stock indices ended lower, giving up earlier gains. The NASDAQ, which had risen by 327 points, closed down 7.23 points. The Dow Industrial Average fell by 330.30 points, finishing at 44,130.98, after peaking with a gain of 204.54 points. The S&P dropped by 23.51 points, and the Russell 2000 decreased by 20.74 points.

Market Winners And Losers

Meta and Microsoft retained most of their gains after reporting strong earnings. Meta’s shares rose by $78.23, while Microsoft increased by $20.26 after market hours. Apple’s Q3 2025 earnings beat expectations, with EPS at $1.57 and revenue of $94.04 billion, boosting its shares by $3.80. Coinbase reported Q2 2025 earnings with EPS at $5.14 but fell short of EBITDA expectations, leading to a share price drop of $16.21. Stryker reported better-than-expected Q2 2025 results, with adjusted EPS of $3.13, but its shares fell by $14.78. First Solar also exceeded expectations, showing EPS at $3.18, and its shares rose by $7.27. Amazon beat EPS expectations but missed on AWS net sales, resulting in a decline of $7.13 in its stock price.

Market Warnings And Strategic Observations

Today, July 31, 2025, highlights a significant warning in the market. The NASDAQ’s drop from a 327-point gain to a flat close shows a classic reversal pattern. This implies that buying pressure is fading, and traders should brace for increased volatility. This weakness indicates that even impressive earnings from companies like Meta and Apple can’t support a rally. The CBOE Volatility Index (VIX) surged over 15% to close at 15.2, its highest in a month. Buying call options on the VIX could be a smart move to profit from the rising fear expected in August. The reaction to after-hours earnings is revealing. When firms like Amazon and Coinbase surpass profit estimates but their stocks decline, it shows the good news is already factored in. This “sell the news” response serves as a bearish sign, indicating limited upside potential. This behavior fits into a broader context. The latest CPI inflation report showed a rise to 3.4%, higher than the 3.2% expected by economists. This keeps pressure on the Federal Reserve and unsettles investors hoping for rate cuts. We should monitor the Russell 2000 index closely, which underperformed today. This suggests the broader market weakness extends beyond major tech stocks. We believe buying put options on the IWM, an ETF tracking the Russell 2000, is a wise strategy for potential downturns. The current market situation feels reminiscent of the choppy conditions from late 2023, where rallies consistently stalled at significant levels. The CBOE’s total put/call ratio has also risen to 0.95 from a low of 0.80 last week, indicating that savvy investors are starting to hedge against declines. Given the significant reversal, purchasing near-term put options on the QQQ, the ETF tracking the NASDAQ 100, appears to be a key strategy. Today’s inability to maintain gains suggests a test of lower support levels in the coming weeks. We should focus on protecting against a pullback rather than chasing rallies. Create your live VT Markets account and start trading now.

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