Dow Jones futures fell 0.22% to below 50,000 in European hours on Thursday, ahead of the US open. S&P 500 futures slipped 0.27% to about 7,430, while Nasdaq 100 futures dropped 0.42% to near 29,250.
Risk appetite weakened amid uncertainty over US-Iran talks and tighter Fed signals. President Donald Trump said negotiations with Iran were in their final stages, but said military action could resume within days if terms are rejected.
Fed Signals And Geopolitical Risk
April FOMC minutes showed a majority of Fed officials said rates may need to rise if inflation stays above the 2% target. The minutes also referred to inflation risks linked to the geopolitical conflict.
US shares rose on Wednesday as oil prices and Treasury yields fell. Nasdaq 100 gained 1.54%, the Dow 1.31%, and the S&P 500 1.08%.
NVIDIA reported quarterly revenue of $81.62 billion and net income of $58.32 billion, raised its dividend, and announced an $80 billion share buyback. Intuit posted $8.6 billion revenue, up 10% year on year, raised guidance, and announced a 17% workforce cut affecting about 3,000 roles.
Analog Devices reported $3.62 billion revenue, up 37% year on year, and announced a $1.5 billion deal for Empower Semiconductor. Walmart is forecast to deliver 3.85% same-store sales growth and 4% US comps growth, while Deere is expected to report a 12.5% year-on-year fall in EPS.
Volatility And Hedging Strategies
With the Dow Jones futures trading nervously below the 50,000 mark, we are seeing clear anxiety driven by the uncertain US-Iran talks and a hawkish Federal Reserve. The heightened risk suggests that buying volatility is a prudent strategy, possibly through call options on the VIX index. Historically, geopolitical events of this magnitude have caused the VIX to surge above 30, a level that offers significant upside from its current position.
The Federal Reserve’s minutes are a direct warning that interest rate hikes are back on the table, especially with core inflation remaining stubbornly above 3%. To protect existing portfolios, we believe traders should look at buying protective puts on major indices like the S&P 500 and Nasdaq 100. This is a defensive posture similar to what proved effective during the rate hike cycle we navigated through in 2025.
NVIDIA’s report confirms the artificial intelligence boom is incredibly profitable, but the stock’s slight dip reveals just how high expectations have become, with its forward price-to-earnings ratio still over 60. This creates an opportunity for selling cash-secured puts at a lower strike price, allowing traders to collect premium while setting a more attractive potential entry point. The announced $80 billion buyback provides a strong underlying support for the stock, limiting extreme downside risk.
The contrast between the upcoming earnings for Walmart and Deere signals a clear split between the resilient consumer and the struggling industrial sector. Recent data shows US manufacturing PMI has slipped to 49.5, indicating contraction, while consumer spending remains positive. This divergence makes a pairs trade attractive, such as going long on Walmart calls while simultaneously buying puts on Deere.
Intuit’s decision to cut 17% of its workforce despite strong revenue highlights the aggressive corporate pivot toward AI-driven efficiency. This reinforces our view that the most reliable trades are on the companies building the AI infrastructure, not just those using it. The strategic acquisition by Analog Devices makes it a prime candidate for bullish call spreads, as it is directly capitalizing on the immense demand for AI hardware.
