The major US stock indices lost their early gains today. The NASDAQ closed higher, reaching a new record, while the S&P and Dow fell. Here’s how they finished: – **Dow Industrial Average**: Down 224.48 points (0.51%), closing at 43,968.64. – **S&P Index**: Down 5.06 points (0.08%), closing at 6,340.00. – **NASDAQ Index**: Up 73.27 points (0.35%), closing at 21,242.70. – **Russell 2000**: Down 6.56 points (0.30%), closing at 2,214.71.

Intraday Indices Performance

At their peak during the session, the indices showed gains: – **Dow**: Up 305.31 points. – **S&P**: Up 44.65 points. – **NASDAQ**: Up 238.73 points. – **Russell 2000**: Up 21.87 points. This market behavior indicates a significant divide, creating chances for traders. The NASDAQ hit a new high, while the Dow and Russell 2000 slipped. This suggests that money is flowing into a few large tech companies instead of spreading across the economy. This shift seems linked to July 2025 inflation data, which was slightly higher than expected at 3.4%. This rise has sparked fears that the Federal Reserve might take longer to reduce interest rates—typically a bigger concern for industrial sectors and smaller firms than for dominant tech companies. The market’s turn from its highs indicates that investors are growing anxious about this outcome. The substantial intraday drop, where early gains vanished for most stocks, is a worrying sign. Such price movements often indicate underlying weakness and uncertainty among buyers. In response, the CBOE Volatility Index (VIX) rose by over 8% to close at 17.5, showing that the market is anticipating possible sharp changes ahead.

Strategies and Market Outlook

Given this scenario, we’re exploring strategies that capitalize on the growing gap between tech and the broader market. One approach could be buying call options on the NASDAQ 100 while buying put options on the Russell 2000. This strategy could profit if large-cap tech continues to do well while smaller companies struggle. With rising volatility, buying options is becoming more appealing than selling them. Purchasing puts on the S&P 500 could be a simple way to hedge against potential market declines in the upcoming weeks. The cost of this protection is increasing, suggesting that others are also bracing for a pullback. This market trend resembles parts of 2023, where a few large-cap stocks drove most of the index gains. Historically, this narrow leadership has often preceded times of greater volatility and market corrections. As a result, we are adopting a more cautious approach than a few weeks ago. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now