Major US stock indices finished lower, reversing earlier gains. The NASDAQ, which had risen by 327 points, ended down by 7.23 points. The Dow Industrial Average fell by 330.30 points, settling at 44,130.98, after a prior climb of 204.54 points. The S&P dropped by 23.51 points, and the Russell 2000 declined by 20.74 points.

Market Winners And Losers

Shares of Meta and Microsoft maintained most of their gains after posting strong earnings. Meta’s stock rose by $78.23, and Microsoft increased by $20.26 in after-hours trading. Apple exceeded expectations with Q3 2025 earnings of $1.57 EPS and $94.04 billion in revenue, resulting in a $3.80 increase in its share price. Coinbase reported Q2 2025 earnings of $5.14 EPS but missed EBITDA targets, causing its shares to fall by $16.21. Stryker showed better-than-expected Q2 2025 results with an adjusted EPS of $3.13, but its shares dropped by $14.78. First Solar also exceeded expectations with an EPS of $3.18, boosting its shares by $7.27. Amazon beat EPS expectations but fell short on AWS net sales, leading to a $7.13 decrease in its share price.

Market Warnings And Strategic Observations

Today, July 31, 2025, shows clear warning signs in the market. The NASDAQ giving up a 327-point gain to close flat is a classic reversal pattern, indicating that buying pressure is fading. Traders should brace for more volatility. This drop reveals that even impressive earnings from major companies like Meta and Apple aren’t enough to sustain market rallies. The CBOE Volatility Index (VIX) jumped over 15%, closing at 15.2, its highest in a month. Buying call options on the VIX could be a smart move to profit from the anticipated rise in fear for August. The after-hours earnings reactions are revealing. Companies like Amazon and Coinbase may have beaten profit estimates, but their stocks still fell. This signals that good news is already baked into prices, a “sell the news” reaction that suggests limited upside potential. Looking at the broader picture, the latest CPI inflation report showed a 3.4% increase, slightly above the desired 3.2%. This maintains pressure on the Federal Reserve and unsettles investors hoping for rate cuts. It’s important to monitor the Russell 2000 index, which struggled the most today. This indicates broad market weakness beyond just big tech stocks. We believe buying put options on the IWM, the ETF tracking the Russell 2000, is a wise way to prepare for a potential downturn. This situation resembles the market instability of late 2023, where rallies repeatedly failed at important levels. The CBOE total put/call ratio has increased to 0.95 from a low of 0.80 last week, indicating that smart money is starting to protect against losses. Given today’s dramatic reversal, buying near-term put options on the QQQ, the ETF for the NASDAQ 100, is a key strategy. The inability to hold gains suggests a potential test of lower support levels in the weeks ahead. We need to shift our focus from chasing rallies to guarding against a potential pullback. Create your live VT Markets account and start trading now.

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