The Dow Jones Industrial Average (DJI) is facing resistance near 45,000, with potential for a decline to 43,950 to 43,850. The Nasdaq 100 (NDX) hit a new high on 3 July at 22,896, surpassing a previous high. Similarly, the S&P 500 (SPX) reached a new high last week at 6,284.85. The DJI might signal corrective declines sooner, having previously reached a high in December 2024 and retested it in January 2025.

President Trump’s extension of the tariff deadline increases economic uncertainty. Economists predict global economic growth will slow, with the US particularly affected. Businesses are hesitant with investments due to this uncertainty.

July Seasonality Trends

July seasonality displays historical trends, with the DJI typically closing 2.3% higher 85% of the time since 2006. The NDX usually closes 3.4% higher, and the SPX also closes 2.3% higher 85% of the time since 2006. This information is not an investment offer or advice and could change without notice. Risks in trading exist and can result in losses, requiring consideration of personal investment goals. Always seek advice from an independent investment advisor if unsure.

While the Dow hovers near the 45,000 mark, upward momentum lacks conviction. Not only is this level proving stiff to break, but recent price action also hints at hesitancy among buyers. A pullback to the 43,950–43,850 zone appears increasingly likely — an area where previous support may offer a temporary pause. Taking into account that this index already peaked in December 2024 and met resistance again in January, the probability of a short-term retracement seems elevated.

On the other hand, both the Nasdaq 100 and S&P 500 have stormed ahead to fresh highs. The Nasdaq hit 22,896 on 3 July, clearing its earlier record. Similarly, the S&P moved beyond 6,284.85 last week. These new peaks could attract both attention and caution. Sentiment stays optimistic, but it carries a degree of fragility; when markets run too far on stretched valuations, even minor shocks can hit especially hard.

Tariff Deadline Impact

Trump’s decision to extend the tariff deadline adds another layer of anxiety. From our side, the core concern lies not in the event itself, but in what it suggests: that the trade environment may not stabilise soon. Export-driven sectors might delay operational decisions, and markets tend to price such hesitations swiftly. Economists now see less force behind global expansion, expecting slower growth in developed economies — especially the US. That puts earnings forecasts under pressure.

As volatility rises, seasonality data plays a minor yet notable role. Historically, July has leaned positive for equities. The Dow ended the month higher in 85% of years since 2006, with an average gain of 2.3%. The Nasdaq usually adds 3.4% in the same period, while the S&P tends to track similarly to the Dow. However, positive averages can conceal wide variations, so blindly expecting a repeat is risky. Price movement this month will heavily depend on how markets digest trade cues, and how earnings data aligns with already ambitious expectations.

From a derivatives standpoint, we need to be nimble. Taking cues from either the strength of tech-related assets or the weaker action in industrials can offer short-term opportunities. Watching for volatility expansion — especially on days with unexpected headlines — makes sense. Repricing of risk could come quickly. Implementing tight risk controls and using spread structures where appropriate may help navigate this period more effectively. If equity momentum stalls or reverses, options may react much faster than the underlying indices, presenting both risk and possibility.

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