The major European indices mostly ended the day in negative territory. Germany’s DAX fell by 0.41%, while the UK’s FTSE 100 saw a minor drop of 0.11%. Spain and Italy experienced larger declines of 0.65% and 0.72% respectively. The exception was France’s CAC, which rose by 0.44%.
In the United States, major indices showed positive movement. The Dow industrial average increased by 111 points, or 0.25%, reaching 45,528.20. The S&P index climbed 13.19 points, or 0.20%, to 6,479.28, setting a new record close. The NASDAQ index rose by 40.58 points, or 0.19%, to 21,585.25, but remains below its record high of 21,713.14.
Us Treasury Yields
US Treasury yields reflected a more positive yield curve, with the 2-year yield at 3.643% and the 5-year yield steady at 3.737%. The 10-year yield increased by 1.7 basis points, reaching 4.273%, while the 30-year yield rose by 3.6 basis points to 4.943%. The spread between the 2-year and 30-year yields is 130 basis points.
Nvidia’s earnings announcement is expected soon, with a potential market impact of 6.2% up or down. Currently, Nvidia is priced at $182.09, reflecting a minor increase of 0.18%.
We are observing a significant divergence between US and European equity performance. The recent US jobs report showed continued strength with 195,000 jobs added in July 2025, supporting the record high in the S&P 500. This contrasts sharply with the latest Eurozone Manufacturing PMI, which dipped to 48.5, signaling contraction and justifying a cautious options strategy on indices like the DAX.
We note the US yield curve is steepening, with the 2-10 year spread widening to 63 basis points. Historically, such steepening has often preceded periods of economic expansion, which could benefit cyclical sectors. This environment suggests considering long call positions on financial ETFs, as banks’ net interest margins typically improve when the curve is steep.
Nvidia Earnings Report
The upcoming Nvidia earnings report is a pivotal event, with the options market pricing in a substantial 6.2% move. Given the broader AI sector’s explosive growth, which saw a 35% increase in enterprise spending in the first half of 2025, we believe this volatility is justified. Traders could look at strategies like straddles or strangles to capitalize on a large price swing in either direction, regardless of the earnings outcome.
A strong earnings report from Nvidia could further fuel the rally in US tech, potentially pulling the NASDAQ closer to its all-time high from late 2024. This outcome would likely widen the performance gap between US and European markets, reinforcing bullish US derivative plays. However, we must also consider that a significant earnings miss could challenge the current US market leadership and temper the bullish sentiment.
