US stocks ended the day lower, with a poor jobs report initially seen as positive due to anticipated rate cuts. This sentiment later shifted, triggering recession concerns and a downward trend. However, late-day buying activity helped minimise losses for the S&P 500.<\/p>\n
The rate-sensitive Russell 2000 gained due to strength in financials, while the Nasdaq ended the day flat. Other closing changes included the S&P 500 down by 0.36%, DJIA down 0.5%, and Toronto TSX Composite up by 0.45%.<\/p>\n
Over the week, the S&P 500 increased by 0.3%, Nasdaq Composite rose by 1.4%, Russell 2000 added 1.0%, and the Toronto TSX Composite grew by 1.7%. The DJIA, however, decreased by 0.3%.<\/p>\n
The market is struggling to decide if bad news is truly good news. We saw this today after the September jobs report showed a disappointing gain of only 50,000 jobs, far below the 150,000 that was expected, while unemployment rose to 4.2%. The initial positive reaction based on hopes for Federal Reserve rate cuts was quickly erased by a wave of recession fears.<\/p>\n
This uncertainty has caused volatility to jump, with the VIX climbing above 22 for the first time since July 2025. For us, this means option premiums are becoming more expensive, rewarding strategies that sell volatility if we believe the market will remain caught in a range. We should consider trades like iron condors on the SPX to collect premium from both sides.<\/p>\n
We are also seeing a clear split in the market, with the rate-sensitive Russell 2000 rallying while the Dow Jones fell. This indicates a belief that smaller companies and financials might benefit more from potential rate cuts than they will be harmed by a slowdown. This presents an opportunity for pair trades, such as buying calls on a financial ETF while buying puts on an industrial or consumer discretionary ETF.<\/p>\n
This price action is reminiscent of what we witnessed in late 2007, when the market cheered the first Fed rate cuts while the economy was already rolling over. Those initial relief rallies proved to be temporary as the underlying weakness became undeniable over the next several months. Therefore, despite the high cost, we should think about buying longer-dated puts on major indices as a prudent hedge against a more significant downturn.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US stocks dipped after mixed jobs data stirred recession fears, though weekly indexes mostly posted gains.<\/p>\n","protected":false},"author":62,"featured_media":16985,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-30298","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/30298","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=30298"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/30298\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16985"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=30298"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=30298"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=30298"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}