US Stock Market Today | Dow Jones | Nasdaq Live: S&P 500 and Nasdaq open lower as chip stocks drag, inflation fears persist

Investors are increasingly hedging against downside risks in small-cap stocks, signalling a growing divide in the market even as enthusiasm for AI-driven large-cap names remains strong. Demand for protection in the Russell 2000 has picked up amid concerns over rising interest rates and elevated oil prices, which could disproportionately hurt smaller firms.

While optimism around artificial intelligence continues to support large-cap indexes like the S&P 500, analysts warn of stretched valuations and macro risks. Some investors are instead turning to volatility trades or asymmetric options strategies to guard against potential downside, even as expectations remain high for catalysts like Nvidia earnings and a potential SpaceX IPO.