{"success":true,"data":{"id":"c1fdde13-d42a-4813-8c53-e2a9d59cacbf","title":"Navigating the Fed’s next move? Why these trades may be an investor’s best weapon.","summary":"Navigating the Fed’s next move? Why these trades may be an investor’s best weapon. Add us on Google Choose MarketWatch as a preferred source of financial news Resize Explore Our Brands Account Settings Site Search Clear SEARCH Advanced Search➔ Symbols No results found All News Articles Video Podcast...","content":"Navigating the Fed’s next move? Why these trades may be an investor’s best weapon.\n\nAdd us on Google\n\nChoose MarketWatch as a preferred source of financial news\n\nResize\n\nExplore Our Brands\n\n### Account Settings\n\nSite Search Clear SEARCH\n\n[Advanced Search](https://www.marketwatch.com/search?q=)➔\n\nSymbols\n\nNo results found\n\n*   All News\n*   Articles\n*   Video\n*   Podcasts\n\n0 Results\n\nNo Results Found\n\nAuthors\n\nNo results found\n\nSections\n\nNo results found\n\nColumns\n\nNo results found\n\n## Need to Know\n\n## Citigroup strategists say the focus moving forward will fall on data\n\nBy [Barbara Kollmeyer](https://www.marketwatch.com/topics/journalists/barbara-kollmeyer?mod=MW_author_bio?mod=article_byline)\n\nJuly 27, 2026, 7:22 a.m. ET\n\nAdd us on Google\n\nResize\n\nFederal Reserve chairman Kevin Warsh may be driving a more hawkish central bank. Citigroup has an idea on how to play that. Photo: Brendan Smialowski/Agence France-Presse/Getty Images\n\n### Referenced Symbols\n\nThe trading week is pointing to a positive start as tensions appear to be cooling a bit between the U.S. and Iran. Investors are also awaiting earnings from Meta, Microsoft, Amazon and Apple, with heavy attention on the state of artificial-intelligence spending from those big tech names.\n\nPotentially stealing the spotlight this week will be a Federal Reserve meeting, with the chances of an interest rate hike up to 31% from a week ago [following a recent spike in oil prices.](https://www.marketwatch.com/story/the-treasury-market-is-sending-fed-chair-kevin-warsh-a-clear-warning-about-rates-d0026da9)\n\nOur **call of the day** from Citigroup offers some stock advice for investors wary of a surprise hike from new Fed Chairman Kevin Warsh and/or a tone that suggests more tightening to come.\n\nCitigroup CEO: 'We're Cheap. Get on the Train.'[See All Videos](https://www.marketwatch.com/video?mod=cx_article_hc)\n\nCitigroup CEO: 'We're Cheap. Get on the Train.'Play video: Citigroup CEO: 'We're Cheap. Get on the Train.'\n\nWhile there’s no “clear consensus” for that meeting, a hawkish outcome would be a risk for stocks, said a Citi team led by Stuart Kaiser, head of U.S. equity trading strategy. Even if the central bank holds steady in July, chances are at more than 70% for a hike in September, therefore Citi doesn’t see much relief coming for markets after this week’s meeting.\n\nAs Warsh has promised less communication over interest-rate intentions, investors will have no choice but to turn their attention to data and the next meeting in two months.\n\nKaiser and his team said the best move to protect against a Fed hike or a more hawkish central bank is to buy put options on the iShares Russell 2000 ETF\n\n. Put options allow an investor the right to sell an asset at a specified price within a set time frame, and are commonly used if one suspects a selloff might be coming. \n“A data-dependent FOMC [Federal Open Market Committee] and lower index weights in growth and momentum stocks should make IWM more sensitive to reported economic data and FOMC policy decisions and behave more cyclically than in recent history,” they told clients in a note published Sunday.\n\nThey explained that a June rebalance for the small-cap focused Russell 2000\n\n has helped lower its implied volatility, by fixing some distortions that made it less responsive to economic data than traditionally.\nFor example, over the past two years, the index was overly tilted toward growth and price momentum stocks, which made it more sensitive to rates and credit spreads over data.\n\nThose Russell put options are now a cheaper hedge as some of the more volatile names have been stripped out. Average three-month implied volatility — future expectations of volatility — of the 10 biggest stocks on the index is down to 56% from 90% with realized volatility at just over 48% in the past month, they noted.\n\nImplied volatility for the iShares Russell 2000 ETF below peers. \n\nLooking at index-weighted realized volatility across all Russell 2000 member stocks\n\n, they said volatility has dropped by around five points over the last three months.\nWhile the start of earnings season has been stronger, “the bar is clearly higher as the average stock is down 10 basis points on the day they report.” The strategists have a preference for materials, banks, Nasdaq-100 tracker QQQ\n\n and their basket of AI power generation stocks. \nCiti strategists said while they are positive on stocks through month-end at least, investors should proceed cautiously. “Post megacap earnings, we expect stocks will be more sensitive to higher yields, rising oil and imminent equity supply ahead of a traditionally weak seasonal period,” they said.\n\n**Read:**[There’s a technical ‘triple threat’ for stocks, but also places investors can hide](https://www.marketwatch.com/story/theres-a-technical-triple-threat-for-stocks-but-also-places-investors-can-hide-59108c6b)\n\n### The markets\n\nU.S. stock futures\n\n are surging and Treasury yields \n\n are dropping. That’s after oil prices \n\n sank as the U.S. and Iran paused hostilities, with hopes rising for another round of negotiations.\n\nKey asset performance Last 5d 1m YTD 1y\nS&P 500 7411.98-0.61%0.79%8.28%16.02%\nNasdaq Composite 24,975.82-2.13%-1.27%7.46%18.32%\n10-year Treasury 4.638 4.10 25.90 46.60 22.10\nGold 4099.7 2.19%1.72%-5.37%23.71%\nOil 82.53 0.13%17.20%43.76%23.22%\nData: MarketWatch. Treasury yields change expressed in basis points\n\n### The buzz\n\nChina memory-chip maker ChangXin Technology Group surged [more than five times from its initial public offering price](https://www.marketwatch.com/story/fivefold-increase-for-chinese-chip-maker-cxmt-in-shanghai-debut-2861827e) in a blockbuster debut in Shanghai.\n\nNvidia\n\n is reportedly in discussions to provide around [$250 billion in financial backing for OpenAI](https://www.wsj.com/tech/ai/nvidia-in-talks-with-openai-to-guarantee-250-billion-financing-for-data-center-3dd6eae3?mod=article_inline) to lease a massive Ohio data-center project.\nDurable-goods orders are due at 8:30 a.m. Eastern.\n\n### Best of the web\n\n### The chart\n\nApollo chief economist Torsten Sløk flags this chart that shows how investors shouldn’t write off all software as vulnerable to AI disruption. The chart shows strongly performing security and infrastructure, which provides “critical data backbones, compute pipelines and complex protection systems that generative models actively expand rather than displace.” Weaker areas are application and vertical software owing to worries about fallout from automated AI workflows. “The bottom line is that the market is clearly favoring foundational security and infrastructure layers over legacy applications as artificial intelligence reshapes software business models.” The iShares Expanded Tech-Software Sector ETF\n\n is down 16% so far this year.\n### Top tickers\n\nThese were the top-searched tickers on MarketWatch as of 6 a.m.:\n\nTicker Security name\n[TSLA -2.08%](https://www.marketwatch.com/investing/stock/tsla?mod=article_chiclet)Tesla\n[SPCX -2.68%](https://www.marketwatch.com/investing/stock/spcx?mod=article_chiclet)SpaceX\n[NVDA -0.92%](https://www.marketwatch.com/investing/stock/nvda?mod=article_chiclet)Nvidia\n[MU -6.99%](https://www.marketwatch.com/investing/stock/mu?mod=article_chiclet)Micron\n[TSM -2.93%](https://www.marketwatch.com/investing/stock/tsm?mod=article_chiclet)Taiwan Semiconductor Manufacturing Co.\nAMD Advanced Micro Devices\n[INTC -7.89%](https://www.marketwatch.com/investing/stock/intc?mod=article_chiclet)Intel\n[AAPL +3.53%](https://www.marketwatch.com/investing/stock/aapl?mod=article_chiclet)Apple\n[MSFT +0.03%](https://www.marketwatch.com/investing/stock/msft?mod=article_chiclet)Microsoft\n[SNDK -10.79%](https://www.marketwatch.com/investing/stock/sndk?mod=article_chiclet)Sandisk\n\n### Random reads\n\n### Beyond the headlines\n\nMarketWatch Picks: [I’m 63 and facing ‘imminent retirement.’ Now I want to max out my $500K inheritance. How](https://www.marketwatch.com/picks/im-63-and-facing-imminent-retirement-now-i-want-to-max-out-my-500k-inheritance-how-a3a69387)?\n\nCopyright ©2026 MarketWatch, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8\n\n#### Partner Center\n\n#### Most Popular\n\nAbout the Author\n\nBarbara Kollmeyer is based in Madrid, where she leads MarketWatch's premarket coverage of financial markets and writes the Need to Know column. She has worked in London and Los Angeles for MarketWatch previously. Follow her on Twitter @bkollmeyer.\n\nShow Conversation (0)\n\nBACK TO TOP\n\nCopyright © 2026 MarketWatch, Inc. All rights reserved.","source_name":"MarketWatch","source_url":"https://www.marketwatch.com/story/navigating-the-feds-next-move-why-these-trades-may-be-an-investors-best-weapon-7a7e80c0?mod=mw_rss_topstories","url":"https://www.marketwatch.com/story/navigating-the-feds-next-move-why-these-trades-may-be-an-investors-best-weapon-7a7e80c0?mod=mw_rss_topstories","author":"[![Image 13: Barbara Kollmeyer](https://i.mktw.net/_newsimages/2014_dreds/barbKollmeyer_183.png)](https://www.marketwatch.com/topics/journalists/barbara-kollmeyer?mod=MW_author_bio?mod=article_byline)","author_name":"[![Image 13: Barbara Kollmeyer](https://i.mktw.net/_newsimages/2014_dreds/barbKollmeyer_183.png)](https://www.marketwatch.com/topics/journalists/barbara-kollmeyer?mod=MW_author_bio?mod=article_byline)","published_at":"2026-07-27T11:22:00.000Z","publication_date":"2026-07-27T11:22:00.000Z","image_url":"https://www.marketwatch.com/","category":"markets","topic":"markets","tags":[],"political_bias":null,"bias_score":null,"confidence_score":null,"credibility_score":null,"factual_quality":null,"reading_time":6,"word_count":1103,"view_count":0,"breaking":false,"breaking_news":false,"ai_analysis":null,"fact_check_status":"unverified","archive_status":"hot","language":null}}