The S&P 500 experienced a post-data pullback, with increased volatility in the tech sector compared to the broader index. Some clients capitalised on this dip, which led to what may have been the best trending day in 2026 so far. Despite QQQ surpassing the $626 level, the hesitant movement before the market closed resembled midweek trading patterns.
Precious Metals Hold Ground
Additionally, precious metals delivered gains as support levels maintained strong ground on Thursday. The US Dollar increased due to short-term yield rises, amidst market speculation about upcoming rate cuts following jobs data.
In foreign exchange, the EUR/USD hit multi-week lows in the 1.1625-1.1620 range, pressured by a strengthening US Dollar. The GBP/USD also struggled, breaking below 1.3400, nearing its 200-day SMA due to the US Dollar’s performance. Gold remained positive, testing yearly highs around $4,500 per ounce, benefitting from risk-off sentiment despite a strong Greenback.
Looking ahead, US CPI data might influence the Dollar’s geopolitical momentum. Furthermore, XRP continues under pressure, with weak retail demand as its futures Open Interest drops to $4.15 billion. Reports suggest potential early elections in Japan, which could affect the USD/JPY pair.
The S&P 500’s strong rebound after the volatile jobs data reaction confirms that dips are for buying. We saw weak hands get shaken out as the index powerfully reclaimed the 6,000 level on Friday, which was the best trending day of the year so far. The move was fueled by a December jobs report that showed a healthy 210,000 jobs added but a welcome cooling in wage growth, bolstering the case for a friendlier Federal Reserve.
Market Strategies Post Data Release
For derivatives traders, this suggests that selling out-of-the-money puts on major indices like the SPX or NDX could be a viable strategy to collect premium, as the market seems eager to support pullbacks. The CBOE Volatility Index (VIX) reflected this, spiking to 18 on the data release before collapsing back below 15 by the close, indicating that fear subsided quickly. We should expect volatility to remain present, making options strategies attractive.
The market is now firmly pricing in Fed rate cuts, with futures data indicating a greater than 70% probability of a first cut by the May 2026 meeting. This is the primary driver of the rally, and it’s making the market look past some of the narrower hiring trends mentioned by Fed officials. Traders should position for this tailwind to continue, especially if upcoming data confirms a slowdown in inflation.
Looking ahead, Tuesday’s US CPI report is the next major catalyst that will either confirm or challenge this bullish narrative. After core CPI ended 2025 at an annual rate of 3.5%, any further disinflation will likely accelerate the equity rally and could put pressure on the recently strong US dollar. We should be prepared for a significant market move on that release.
Even with the rally, gold is pushing towards its yearly highs near $4,500, which tells us that traders are still hedging against risk. This strength, despite a rising dollar and yields, is likely tied to geopolitical tensions surrounding potential US-EU trade conflicts and NATO discussions. Buying call options on gold or related ETFs can serve as an effective hedge against any unexpected negative shocks in the coming weeks.
