The DJIA fell about 120 points (0.24%) on Tuesday, while the S&P 500 dropped about 0.5% and the Nasdaq Composite fell about 0.8%. The Dow and S&P 500 have fallen in four of the past five weeks, and the Nasdaq entered the week after five straight weekly declines.
The 10-year Treasury yield slipped to about 4.03%, a two-month low after last Friday’s cooler-than-expected CPI report. Tech shares fell, with Salesforce down about 2.5% and CrowdStrike down more than 2% after a Mizuho rating cut.
Tech And Industrials Slide
Nvidia, AMD, and Broadcom also traded lower. Chevron fell 2.6% and Caterpillar dropped 2.1%, while Travelers rose 1.8%, Visa gained 1.5%, and Apple added 1%.
Danaher fell about 6% after agreeing to buy Masimo for $180 per share in an all-cash deal worth about $9.9 billion. The offer is a 38% premium to Masimo’s Friday close, and Masimo rose about 34%; the deal is set to close in the second half of 2026.
Warner Bros Discovery rose more than 2% as it reopened talks with Paramount Skydance, up about 3%, with a seven-day waiver running to 23 February. Paramount may raise its all-cash offer to at least $31 per share from $30, while Netflix’s $83 billion enterprise-value deal remains in place.
The NY Empire State Manufacturing Index was 7.1 versus 6 expected and 7.7 in January. FOMC Minutes are due Wednesday, markets price about two 25-basis-point cuts by year-end with June as the likely first cut, and Friday brings PCE and preliminary Q4 GDP; Palo Alto Networks reports with revenue seen at $2.58 billion and adjusted EPS at $0.94, after beating revenue estimates in every quarter for two years.
Options And Volatility Strategy
With the Nasdaq now posting its fifth consecutive weekly decline entering this week, we see a clear trend of weakness in technology. Traders should consider buying puts on tech-heavy indices like the QQQ to hedge against or profit from further downside. The CBOE Volatility Index, or VIX, has climbed to 19.5, a significant rise from the low teens we saw in late 2025, suggesting more turbulence ahead.
The ongoing anxiety around AI’s impact on software and hardware is creating opportunities for bearish plays. We believe purchasing puts on names like Salesforce (CRM) and Nvidia (NVDA) remains a viable strategy, as the market questions their lofty valuations. Year-to-date, the iShares Expanded Tech-Software Sector ETF (IGV) is already down nearly 8%, and this momentum appears set to continue through the end of the month.
This week’s upcoming FOMC minutes and PCE data will be critical for rate-sensitive positions. Given the 10-year Treasury yield is at two-month lows, call options on Treasury ETFs like the TLT could be a good way to bet on yields falling further. The CME FedWatch tool now shows a 75% probability of a rate cut by the June meeting, a conviction that will be tested by Friday’s inflation data.
Merger activity is injecting volatility into specific sectors, a notable shift after a slower M&A environment in 2025. With the Warner Bros and Paramount talks creating uncertainty, using a straddle on Paramount (PSKY) could capture a significant price swing regardless of the outcome. Similarly, the drop in Danaher’s (DHR) stock post-acquisition announcement could be played by purchasing puts if we believe the market will continue to penalize the high premium paid for Masimo.
The upcoming Palo Alto Networks (PANW) earnings report after the bell is a prime event for an options play. Given the stock’s history of beating estimates, coupled with the current tech sector anxiety, a significant price move is likely. The options market is currently pricing in an 11% post-earnings move, making a long straddle a way to bet on volatility itself.
