U.S. stocks opened mixed Thursday as technology losses weighed on the S&P 500 and Nasdaq Composite, while the Dow Jones Industrial Average remained near record territory. The uneven start came as record call-option activity pointed to intense risk appetite, even as weakness in transportation stocks raised questions about the rally’s underlying strength.
At the opening bell, the Dow rose 77.7 points, or 0.14%, to 54,426.85. The S&P 500 fell 0.13% to 7,713.79, while the Nasdaq dropped 0.36% to 26,268.84. The Dow entered Thursday after recording its third consecutive record close Wednesday.
Technology Earnings Weigh on the Nasdaq
Semiconductor and software stocks led the early declines. Sandisk and Western Digital fell sharply despite reporting results above Wall Street estimates, as investors focused on their forecasts and whether recent gains had already priced in strong artificial intelligence demand.
Honeywell Aerospace also sank after cutting its full-year sales forecast and reporting weaker-than-expected profit. Moderna moved higher after receiving regulatory approval for its mRNA influenza vaccine, while Keurig Dr Pepper gained following better-than-expected earnings.
The economic backdrop offered limited direction. Initial unemployment claims increased by 1,000 to 199,000 in the week ended Aug. 1, remaining low by historical standards. Second-quarter nonfarm productivity increased at a 1.4% annual rate, while unit labor costs rose 1.3%.
The 10-year Treasury yield hovered near 4.64% as investors prepared for Friday’s July employment report. A strong reading could revive concerns that the Federal Reserve may need to keep monetary policy tight, while a weak report could raise questions about economic growth.
S&P 500 Call-Option Volume Signals Aggressive Risk Taking
The Kobeissi Letter said S&P 500 call-option volume reached a record 4.017 million contracts Tuesday, more than doubling over several weeks. Its chart also shows how dramatically call activity has expanded since 2020 and 2021, when daily volume averaged about 700,000 contracts.
The increase reflects heavy demand for upside exposure and could help explain the speed of the recent S&P 500 rally. Call buying can reinforce gains when market makers purchase stocks or futures to hedge their options exposure.
However, volume alone does not prove that every trade is a bullish wager. Calls can also form part of spreads, short-position hedges or other strategies. The practical signal is that positioning has become unusually aggressive, increasing the risk of sharper moves if sentiment changes. Cboe publishes daily SPX options volume and put-call statistics for monitoring that positioning.
Dow Jones Rally Lacks Confirmation From Transports
A second chart highlights a different concern. The Dow Jones Industrial Average gained roughly 10% over the chart’s displayed period, while the Dow Jones Transportation Average remained below its starting point.
Under Dow Theory, a lasting market advance carries more weight when industrial and transportation stocks rise together. The idea is that stronger production should eventually produce stronger demand for companies that move goods through the economy.
The divergence deserves attention, but the comparison with 2007 does not mean another financial crisis is approaching. It is a warning about limited confirmation, not a timing signal. For Thursday’s session, the central test is whether strength broadens beyond the Dow while technology stabilizes and transportation shares begin to recover.
