The broader US stock indices are relatively stable in early trading, following record highs for the Dow, S&P, and NASDAQ. Eleven minutes into the opening, the Dow is down by 64 points or 0.14% at 46,044, the S&P has decreased by 2.09 points or 0.03% at 6,585.44, while the NASDAQ has risen by 10 points or 0.05% at 22,053.25.
Among today’s gainers, Paramount Skydance saw a 6.01% increase in anticipation of a bid for Warner Bros. Discovery. Micron rose by 3.18% due to a favourable outlook for memory chips related to AI and data centre expansions. Super Micro Computer’s stocks grew by 2.89% as server demand remains strong, boosting its position above the 100-day moving average.
Shares See Increases
Corning’s shares are up by 2.82%, aided by a positive outlook for display glass demand. Tesla stocks increased by 2.55%, with production targets and robust demand for electric vehicles boosting the price. Nebius NV and Roblox saw upticks of 2.11% and 1.97% respectively, linked to cloud, AI infrastructure, and product engagement.
General Motors, SoFi Technologies, Western Digital, and Microsoft enjoyed gains, benefiting from electric vehicle strategies, consumer lending expectations, AI, and cloud growth trends.
With major indices at record highs, we see this pause as a signal to protect recent gains. The CBOE Volatility Index (VIX) has been hovering near a low of 13, which is significantly below its long-term average of around 19. This makes buying protective put options on the S&P 500 (SPY) or Nasdaq 100 (QQQ) a relatively inexpensive form of portfolio insurance for the next several weeks.
Future Expectations
The main engine of this market is clearly AI-related hardware, a trend that has been building for years. We saw how persistent demand for data center infrastructure led to blowout earnings for key suppliers throughout 2024. Therefore, we believe it is prudent to maintain exposure to leaders like Micron and Super Micro, perhaps by using bull call spreads to capture further upside while defining our risk.
Tesla’s breakout above the $367 resistance level is a powerful technical indicator, especially as it pushes the stock closer to its all-time highs from back in 2021. This move suggests strong momentum that could continue in the near term. We see buying near-term call options as a straightforward way to capitalize on this specific stock’s strength, separate from the broader market.
This bullish environment is supported by a macro-economic picture that is much calmer than in previous years. After the inflation challenges of 2023 and 2024, the Consumer Price Index (CPI) has stabilized around a manageable 2.5% annual rate. This has given the Federal Reserve justification to hold interest rates steady, fueling investor confidence in growth-oriented technology and consumer sectors.
