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US equity markets see significant weekly gains as S&P 500 and Nasdaq Comp rise sharply
US equity markets kept rising with strong gains in September. On a daily basis, the S&P 500 went up by 0.5%, the Nasdaq Composite by 0.7%, and the Dow Jones Industrial Average by 0.4%. In contrast, the Russell 2000 fell by 0.7%, while the Toronto Stock Exchange Composite increased by 1.0%.
Over the week, the S&P 500 grew by 1.2%, and both the Nasdaq Composite and Russell 2000 saw a jump of 2.2%. The Toronto Stock Exchange Composite also rose by 1.6%, indicating overall positive movement in most indices.
Late bids drive US stock markets to a record high, ten times above financial crisis lows
The S&P 500 has risen by 28 points, or 0.4%, reaching a new record high of 6660. This increase demonstrates a tenfold rise since the low during the financial crisis, highlighting impressive market growth over the years.
Right now, the rally shows little resistance, with strong momentum from bullish traders. This positive market trend continues, even with some worries about the economy and the Federal Reserve.
Short Term Opportunity
With the market at new heights, there’s a short-term opportunity to consider. Selling out-of-the-money puts on the SPX or major tech ETFs could be a smart move to earn premiums. The CBOE Volatility Index, or VIX, is currently low at 13. This means insurance costs are cheap, making the premiums for selling it more appealing. If you’re looking for a lower-risk approach, we are exploring bull call spreads. This strategy lets us benefit from potential gains while limiting losses if the market sentiment shifts. The strong August 2025 jobs report, which added 210,000 jobs, supports this ongoing upward trend. Be cautious, though. Complacency is a risk when the market feels this strong. We recall the rapid rise in late 2021 followed by a significant correction in 2022. With the VIX being low, buying protective puts is reasonably affordable, offering a cost-effective way to protect long portfolios against sudden downturns.Federal Reserve Concerns
The Federal Reserve is a key concern, as they hinted last week at the possibility of raising rates again before the year ends. Although the August CPI report showed a slight dip to 3.1%, it’s not enough to claim victory over inflation. We should be prepared for more volatility around the upcoming FOMC meeting announcement in November. Create your live VT Markets account and start trading now.Daly discusses how rate cuts are intended to strengthen the labor market in response to recent employment softness.
Mary Daly talked about how the job market has weakened a lot in the past year, especially due to the rise of artificial intelligence affecting jobs.
Daly pointed out that the Federal Reserve cut interest rates to help the job market. Lower rates can encourage spending and help create jobs.
Artificial Intelligence And Its Impacts
When discussing artificial intelligence, Daly mentioned its potential impact on workers. AI advancements could change many industries and job roles. Daly stressed the importance of understanding and managing these changes. It’s crucial to prepare for the challenges AI may pose to traditional jobs. She emphasized that policymakers need to consider these factors. The goal is to stimulate the economy while also adapting to technological changes. Her comments suggest that the Federal Reserve’s recent rate cut is a reaction to the weakened job market. This indicates a shift from focusing on controlling inflation to supporting jobs. It seems we can expect the Fed to maintain a friendly approach in the months ahead.Effects Of A Weakening Job Market
The slowdown in the job market is evident. The August 2025 jobs report added only 95,000 jobs, which was much lower than expected. The unemployment rate also rose to 4.3%, a level not seen since early 2024’s brief recession scare. These figures suggest that more rate cuts might be necessary if the job market keeps weakening. As a result, interest rate derivatives are increasing, betting on lower rates for a longer time. SOFR futures contracts for early 2026 indicate a high chance of at least two more cuts by mid-next year. Options on Treasury futures show a strong trend towards calls, suggesting higher bond prices. For options on equity indices, this creates a tricky situation. While lower rates can boost valuations, a weakening economy may harm earnings. We recommend traders consider call spreads on the S&P 500 to capture some upside as the market adjusts to this news. At the same time, buying inexpensive, out-of-the-money puts for October and November can serve as a hedge against possible negative economic surprises. These mixed signals are likely to keep market volatility high. The VIX index has been above 18, reflecting this economic uncertainty, similar to what we saw during the 2022-2023 rate hikes. We see VIX call options as a cost-effective way to protect against sharp market declines. A dovish Fed is also putting pressure on the U.S. dollar, which has stayed below the important 102 level on the DXY index. We expect this trend to continue as long as the job market is the Fed’s main concern. This makes long positions in currency derivatives for the euro and yen an attractive move against the dollar. Create your live VT Markets account and start trading now.Gold prices rose by $38, nearing pre-FOMC levels as buyers stepped up today.
Gold has risen by $38, reaching $3681, which is close to its pre-FOMC level. It is now just $20 shy of its all-time high.
This week has been tough for gold due to a hawkish Federal Reserve decision and increasing Treasury yields. However, there has been a surge in buying activity that has contributed to today’s gains.
Focus On Geopolitical Factors
The bigger picture for gold is not primarily about Federal Reserve policies or inflation. Instead, attention is shifting toward changes in global trade and geopolitical dynamics. Gold’s strong rebound to $3681, despite the Fed’s tough stance, shows that the market is looking beyond short-term interest rate changes. The significant buying during the dip indicates there is strong demand that isn’t easily disturbed. This stability suggests traders should keep an eye on what is driving these movements. The main factor is the ongoing disruption in global trade and political structures, accelerating since the early 2020s. Central bank activity supports this, as seen in a report from the World Gold Council in mid-2025, which noted that central banks added over 800 tonnes to their reserves this year. This shift represents a move away from fiat currencies amid rising geopolitical tensions. Additionally, the US debt-to-GDP ratio has exceeded 130%, raising concerns about long-term confidence in the dollar. Market anxiety is evident, as the VIX index has been consistently above 18 for most of the year. These circumstances do not favor stability or riskier assets in the long run.Derivative Trading Strategies
For those trading derivatives, a key strategy should be to prepare for a breakout above the all-time high near $3701. Buying out-of-the-money call options for the upcoming months is a cost-effective way to leverage this momentum. The aim is to benefit from a quick rise as attention on geopolitical risks grows. Another approach is to invest in long-term volatility through straddles, which profit from significant price movements in either direction. This strategy bets on the idea that instability will increase, leading to sharp and unpredictable price swings. Given the ongoing global tensions, a sudden surge in volatility seems more likely than a prolonged period of stability. Looking back to the 1970s, we see a similar situation where the collapse of the Bretton Woods system and geopolitical shocks triggered a lengthy rally in gold. That bull market was driven not by a single decision from the Fed but by a fundamental reassessment of money and sovereign risk. We believe we are experiencing a comparable structural shift today. Create your live VT Markets account and start trading now.Proposed $100,000 H-1B visa fee could significantly affect immigration, labor markets, and business strategy
Trump is set to announce a $100,000 fee for H-1B visas, possibly signing the order today. This decision could significantly impact immigration, labor markets, and business strategies.
Smaller companies and outsourcing firms may stop applying for these visas altogether. Large tech firms might also cut back, using visas only for very specialized positions.
H-1B Visa Basics
The H-1B visa allows employers to hire foreign professionals in fields like technology, engineering, and medicine. To qualify, applicants need at least a bachelor’s degree and specialized skills. The U.S. issues around 85,000 H-1B visas each year, which could generate $8.5 billion from the new fee. However, tech giants like Nvidia, valued at $4 trillion, could struggle to access important talent. Investors should consider buying put options on IT services and consulting firms. Companies like Infosys, Wipro, and Tata Consultancy Services depend heavily on H-1B visas, and a fee of $100,000 per visa could seriously hurt their business model. Earlier filings in 2025 revealed that these firms file thousands of H-1B petitions, making them particularly vulnerable to this change.Investment Strategy Considerations
Investors might also look at buying put options on the Nasdaq 100 index through ETFs like the QQQ. While large companies like Nvidia can manage the fee, this policy will create a talent shortage that hinders product development and AI research across the sector. A recent Bureau of Labor Statistics report from mid-2025 noted that nearly a quarter of STEM workers in major tech areas are non-U.S. citizens, highlighting the potential depth of this impact. This news creates market uncertainty, so consider options on the VIX, which measures market fear. We’ve seen volatility spikes during similar events from 2017 to 2020, when sudden executive orders on immigration and trade were announced. History shows that such policy shocks, especially in crucial sectors like technology, lead to widespread defensive trading. Even a strong company like Nvidia is at risk; its high valuation relies on consistent innovation. Their growth depends on attracting top global talent in AI, and this policy threatens that flow. Nvidia’s quarterly report from mid-2025 pointed out that competition for specialized talent is a significant operational risk, making its stock particularly sensitive to this news. Create your live VT Markets account and start trading now.Market sentiment rises sharply, suggesting caution while staying above the long-term average
A recent survey by the American Association of Individual Investors shows a rise in stock market sentiment, climbing from 28.0% to 41.7%. This is the biggest jump since January and the highest level since hitting 45.0% on July 3rd, which matched a yearly peak.
This increase isn’t a sell signal right away, but it is above the long-term average of 37.5%, a level not seen in seven weeks. Meanwhile, bearish sentiment remains notably high at 42.4%, well above the average of 31.0%.
Historical Bullish Sentiment
Historically, the highest bullish sentiment was 75% during the dot-com bubble peak in January 2000. In April 2021, bullish sentiment was at 56.9%, right before a market peak in December that same year. Another peak occurred in July 2024, with 52.7% bullishness, followed by a quick 9.7% correction. This decline slowed when the Federal Reserve hinted at a potential rate cut. It’s wise to keep an eye on this sentiment indicator, particularly if it goes above 50% or 55%, as those levels may suggest market volatility. With bullish sentiment experiencing its biggest weekly increase since January, we are now in uncertain territory, especially as the S&P 500 approaches 6,150. High optimism, now exceeding its long-term average, often leads to market pullbacks. A look back at the summer of 2024 shows how a sentiment peak was followed by a sharp drop.Strategy for Portfolio Protection
This suggests it may be a good time to consider securing some portfolio protection before it becomes costly. The CBOE Volatility Index (VIX) is currently around 13.5, which is low historically and indicates market complacency. This means buying options is relatively inexpensive compared to times of market stress, when the VIX can rise above 20 or even 30. Looking at out-of-the-money put options on the SPX or QQQ for October or November could be a smart move. This offers a cost-effective way to hedge against a potential 5-10% downturn like we saw last year. The aim isn’t to predict a market top but to protect the portfolio against a likely dip. However, it’s essential to recognize the high bearish sentiment at 42.4%. The stark difference between bulls and bears suggests disagreement in the market, which can increase volatility. This situation makes strategies that profit from price swings, such as VIX calls or long straddles on volatile tech stocks, appealing. Unlike the 2024 pullback, which had clear signals for rate cuts, the current environment is trickier. The Federal Reserve is on pause, and the latest CPI report shows a slight inflation increase to 2.9%, making further intervention less likely. This economic uncertainty underscores the need for derivative hedges instead of assuming a quick “buy the dip” rebound. Create your live VT Markets account and start trading now.US adds two oil rigs and one natural gas rig amid ongoing drilling activity
Baker Hughes has released new drilling data this week, showing an increase of 2 oil rigs and 1 natural gas rig. Oil prices are currently at $62, which means drilling activity is not slowing down.
Exxon is the main company investing in drilling this year, even with economic uncertainties. This indicates ongoing commitment in the energy sector, with drilling remaining steady.
Current Market Dynamics
The slight rise in drilling rigs suggests that producers are comfortable with oil prices around $62. However, this isn’t a strong push we would expect if a significant price increase were anticipated. The market seems well-supplied for now. It’s important that a major company like Exxon is leading this activity. This suggests that smaller independent drillers are being cautious and adhering to their financial discipline since the market fluctuations of 2023. This cautious approach could limit the chance for a sudden increase in US production. Recent government reports support this supply outlook. The Energy Information Administration announced last week that US crude oil inventories went up by 1.2 million barrels, which surprised analysts who expected a slight decrease. A rising rig count alongside growing inventories indicates a well-supplied market. For traders, this suggests low oil price volatility in the near future. Strategies that thrive in a stable market, like selling covered calls or setting up iron condors in the $60-$65 price range, might be beneficial. We don’t see any major triggers for significant price changes in either direction.Global Demand Signals
On a global scale, demand signals are mixed, which may limit price increases. Recent manufacturing PMI data from China showed a figure of 49.8, indicating a slight contraction and raising concerns about demand from the world’s largest oil buyer. This weak demand outlook serves as a strong counterbalance to supply increases. Given this situation, looking into low-cost bearish options is worth considering as a hedge. Purchasing out-of-the-money puts on crude oil futures for the upcoming months could act as affordable insurance. This would help protect against a possible drop below $60 if economic worries start to overshadow steady, though not very strong, drilling activity. Create your live VT Markets account and start trading now.Trade discussions in Washington boost the Canadian dollar, making it the top G10 currency today.
Canada’s Trade Minister will visit Washington, DC in the next two weeks for trade talks. This news strengthened the Canadian dollar, causing the USD/CAD exchange rate to drop by 23 pips to 1.3768, making it the strongest currency among the G10 today.
Recently, Canada has lowered some tariffs and paused trade actions, showing optimism for a potential agreement. Tariffs were lifted last month, and a dispute over lumber tariffs has been suspended. High tariffs still impact Canadian steel and aluminum industries, while farmers struggle with Chinese retaliatory tariffs following Canada’s ban on Chinese auto imports.
Prime Minister’s Visit to Mexico
Prime Minister Mark Carney visited Mexico to strengthen a “strategic comprehensive partnership” aimed at boosting trade and investment. The agreement focuses on improving trade infrastructure, such as ports and rail, and increasing trade in areas like energy, critical minerals, and agriculture. Examining the USD/CAD exchange rate shows a possible head-and-shoulders top formation. If the neckline breaks, we might return to the summer lows. With Canada’s Trade Minister going to Washington, we have a clear reason for the Canadian dollar’s movement. These discussions are crucial since recent Statistics Canada data from Q2 2025 revealed that over 70% of Canada’s merchandise exports go to the United States, highlighting the importance of any new agreement. The loonie’s quick rise to 1.3768 indicates that the market is anticipating a positive outcome. Canada’s recent decision to remove retaliatory tariffs suggests a true desire to find common ground. Earlier government reports from 2025 noted a 12% drop in output for steel and aluminum producers since the last round of tariffs, hinting that officials feel pressure to secure a deal that eases this economic strain.Technical Analysis and Market Outlook
From a technical perspective, the head-and-shoulders top on the USD/CAD chart supports a bearish outlook for the currency pair. A clear break below the neckline, currently near 1.3720, could lead to more selling towards the summer 2025 lows around 1.3500. Traders might consider buying CAD call options or USD/CAD put options to get ready for this possible drop. The upcoming discussions pose a significant event risk that could introduce needed volatility into the market. Implied volatility for USD/CAD options expiring in October has risen to 7.2%, up from 6.5% last month, signaling that traders expect a larger-than-usual price movement. This situation reminds us of the sharp currency fluctuations during the final USMCA negotiations in 2018. Fundamentally, the Bank of Canada’s position offers additional support for the loonie. Unlike the U.S. Federal Reserve, which has hinted at a pause, the BoC has taken a hawkish stance, keeping its policy rate at 3.75% during its September 2025 meeting. This rate difference makes holding Canadian dollars more appealing and supports our expectation of a stronger currency in the coming weeks. Create your live VT Markets account and start trading now.New York Fed’s 2025 Q3 nowcast rises to 2.10% due to retail sales data.
The New York Fed Staff Nowcast for the third quarter of 2025 is now at 2.10%. This is a small rise from last week’s figure of 2.08%. This change happened because of opposing trends in the Philly and Empire Fed surveys, which balanced each other. Additionally, retail sales gave a minor boost.
More information will be released before the advance reading on the third quarter, which is set for October 30. This data will help create a clearer forecast.
Signs of Economic Resilience
The New York Fed’s GDP nowcast stabilizing around 2.1% is a good sign of ongoing economic strength. This lowers the likelihood of a Federal Reserve interest rate cut, which seemed more likely earlier in the summer of 2025. This steady growth suggests that we will probably see higher interest rates for a longer time. Given this situation, traders should be careful about expecting significant interest rate cuts soon. The CME FedWatch Tool indicates that the market sees only a 25% chance of a cut by December. This GDP data supports that low odds. Therefore, it makes sense to use SOFR futures to reflect a stable federal funds rate for the rest of the year. This consistent growth also suggests that market volatility may stay low. With the VIX around 14, which is historically low, selling options premium on broad indexes like the S&P 500 could be a smart strategy. We are considering using iron condors to benefit from a market expected to rise steadily without major disruptions.Strength in the Consumer Sector
The rise in retail sales indicates strength in the consumer sector. The Consumer Discretionary Select Sector SPDR Fund (XLY) has increased over 4% in the last quarter, outperforming the industrial sector. Using call options or call spreads on consumer-focused ETFs could be an effective way to take advantage of this strength. Overall, the data shows that the “soft landing” scenario is still on track. We expect a market that is not overheating and is not heading into a recession. The main risk remains a surprising rise in inflation in the next report, which could prompt the Fed to act and disrupt the current stability. Create your live VT Markets account and start trading now.Trump highlights progress with Xi on trade, fentanyl, and APEC meetings after productive conversation
Donald Trump recently spoke positively with President Xi of China. They discussed several important topics, including trade, Fentanyl issues, the Russia-Ukraine conflict, and the approval of the TikTok deal. They plan to continue conversations and will meet at the APEC Summit in South Korea.
Trump is set to visit China early next year, and President Xi is also expected to arrive in the United States. They expressed their satisfaction with the TikTok deal and look forward to their APEC Summit meeting.
