Stocks closed mostly unchanged today, with major indices under pressure. The S&P index and NASDAQ fell, while the Dow Industrial Average slightly increased. The Russell 2000 index also declined, indicating a mixed market performance across different stock categories.
Closing levels for major indices were: the Dow rose 0.02% to 44,922.39, the S&P dropped 0.58% to 6,411.45, and the NASDAQ decreased by 1.46% to 21,314.95. Chip stocks faced decline except for Intel, which saw a 6.97% increase following its $2 billion stock sale to SoftBank, despite dilution concerns.
Impact on Chip Stocks
Other chip makers fared worse, with Broadcom, Nvidia, AMD, Taiwan Semiconductor, ASML, and Micron all seeing declines ranging from 0.53% to 5.44%. The NASDAQ closed below the 100-hour moving average, suggesting a short-term bearish outlook, with technical focus shifting to the 200-hour moving average at 21,123.54 tomorrow.
Sector performance varied, with 7 out of 11 S&P sectors recording gains. Real estate saw a 1.8% increase, consumer staples rose 1.0%, and utilities climbed 0.83%. On the downside, information technology fell by 1.88%, telecom services by 1.16%, and consumer discretionary by 0.38%.
The recent selling in growth and tech stocks suggests a shift in market leadership is underway. We are seeing money flow out of momentum names like Nvidia and AMD and into defensive sectors. This is a signal to consider buying put options on the NASDAQ 100 ETF (QQQ) to hedge against or profit from further declines.
This rotation is supported by recent economic data, with the July 2025 CPI report coming in hotter than anticipated at 3.4%. This raises concerns about the Fed’s path, making safer havens like utilities and consumer staples more attractive. We should look at call options on ETFs like the XLU and XLP to follow this money flow.
NASDAQ’s Technical Warning
The NASDAQ’s break below its 100-hour moving average is a key technical warning for us. If it fails to hold the 200-hour moving average near 21123, we could see an accelerated move down. A rise in implied volatility would make buying VIX calls a potentially profitable strategy for the coming weeks.
We can also express this view through a pairs trade to isolate the rotation itself. This involves buying calls on a defensive sector ETF while simultaneously buying puts on a tech-focused one. This strategy profits directly from the performance gap between value and growth, regardless of the overall market’s direction.
This pattern of weakening market breadth is something we’ve seen before, reminiscent of the setup in early 2022. Back then, a similar rotation out of tech preceded a much broader market downturn. History suggests we should take these early warning signs seriously and position our portfolios accordingly.
