The major US indices concluded the week on a downward trend, with the NASDAQ and Russell indices both falling over 2%. Key factors included the implementation of August 1 tariffs, poor jobs data due to revisions, US nuclear submarines positioning amid geopolitical tensions, and the dismissal of the BLS chief for data manipulation allegations.

The specific declines were: Dow industrial average fell by 542.40 points, or 1.23%, to 43,588.58; the S&P index dropped 101.38 points, or 1.60%, to 6,238.01; the NASDAQ index decreased 472.32 points, or 2.24%, ending at 20,650.13; Russell 2000 was down 44.86 points, or 2.03%, to 2,166.78. Over the trading week, the Dow dropped 2.92%, S&P by 2.36%, and NASDAQ by 2.17%.

Companies That Performed Well

Despite the market slump, some companies performed well such as Corning with a 12.10% rise following positive earnings, and Meta and Microsoft saw gains of 5.21% and 2.05% respectively. Next week, earnings reports are expected from various companies including Berkshire Hathaway, Pfizer, Disney, and others, potentially influencing market movements.

With new tariffs and a surprisingly weak jobs report, we see this as a clear signal to consider protective puts on major indices like the SPX and QQQ for the coming weeks. The August 1 jobs data showed a net loss of 50,000 jobs after revisions, a sharp contrast to the expected gain of 180,000 and the first negative print since 2023. This kind of miss has historically preceded further market downside as recession fears grow.

The rising geopolitical tension, highlighted by the movement of nuclear submarines, is directly fueling market anxiety. We’ve seen the VIX, the market’s fear gauge, spike over 25% this week to close above 22, a level not consistently seen since the regional banking stress back in early 2024. Traders should look at VIX call options or volatility-linked ETFs to hedge against or profit from a further increase in market turbulence.

Opportunities In The Defense Sector

This environment points toward opportunities in the defense sector, as firms like Northrop Grumman are already showing strength. The iShares U.S. Aerospace & Defense ETF (ITA) has already outperformed the S&P 500 by over 8% year-to-date in 2025, and these new global tensions could accelerate that trend. Using call options on these names may offer upside exposure even if the broader market falls.

Despite the sell-off, we’re seeing impressive strength in specific areas like AI and semiconductors, with names like Meta and Super Micro continuing to rally on strong earnings. This divergence suggests that selling cash-secured puts on fundamentally strong tech companies could be a viable strategy. This allows traders to collect premium from the elevated fear while potentially acquiring strong assets at a discount if the market dips further.

With major companies like Disney, Eli Lilly, and AMD reporting earnings next week, implied volatility is climbing sharply. Implied volatility for Disney’s options, for example, is suggesting a potential 8% price swing post-announcement, well above its quarterly average. This makes options strategies like straddles or strangles attractive for traders who expect a big price move but are unsure of the direction.

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