Fidelity Investments

With Fidelity Active ETFs, you can have the flexibility needed to adapt and transform based on market conditions with potential tax efficiencies. 

FidelityETF_BM_OTT_September2025

Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.

Brew Markets

Investing

Morning Brew Creative Studio

brewmarkets.com

Micro is back, baby. But we aren’t talking about micro mini shorts (this time). We’re actually talking about the micro index, a small-scale index that tracks a specific segment of the stock market.

And what do you get when you offer low-cost investment options based on those specific, small-scale market segments? A fancy-schmancy 

Got some dollars to invest? We teamed up with 

 to see if these li’l guys might be right for you.

Let’s *not* get physical. Because with micro index options, 

 physical shares or assets are exchanged between the buyer and seller. Instead, settlements are made entirely in cash. The amount you get is based on the difference between the option’s strike price and the actual closing value of the index on expiration.

That’s how micro index options help keep investing simple. No need to worry about delivering those assets. Just pick your index option of choice and watch it automatically settle, in cash, at the time of expiration.

No bald eagle sound effects needed here. Micro index options are European style, meaning they cannot be assigned ahead of their expiration date. (One less thing to worry about.) 

So, if you’ve got a little $$$ to spare and want to keep your investing simple, micro index options might be what you need. Plus, cash settlement keeps things “uncomplicated.” Set it and forget it? Yes, please.

Micro index options have granular expiry cycles, meaning they expire on a certain schedule (like quarterly, monthly, weekly, or daily) but always with settlement at market close. Traders like you can pick exactly when you want your options to expire (based on the schedule, of course).

It’s like a sweet spot for managing exposure. You’re not stuck waiting on one specific expiration date, but you don’t have to watch the market like a hawk. Just peruse the expiration schedule and pick the date that works for you.

Micro index options can also offer a nice tax perk for those who qualify. Their potential tax benefits include a 60/40 capital gains tax rate (which lowers the taxes on your profits).

Let us explain: The potential tax benefits are extended independent of the holding period. An index option that you hold for one day gets the same tax treatment as one held for a year and a half (long-term).

If micro index options sound like the right option for you, here’s one you should consider: 

, at 1/100th of the value, to be exact. XND® index options are:

affordable, thanks to lower capital requirements and smaller-sized contracts

flexible, thanks to granular expiry cycles (remember those?)

even more flexible, with monthly and weekly PM settlements for you to choose from

 give you a little more precision, control, and efficiency than your average micro index option—

 sacrificing the tax benefits, expiration choice, or strategy.

, pack a pretty big punch in their tiny package. They offer uber-precise market exposure, have low capital requirements, and come with lots of flexibility—with some potential tax benefits thrown in for good measure.

Whether you’re new to options or just trying to choose the best one for your financial situation, these micro index options can help you invest more precisely without getting too complicated with your investing strategy.

A hand holds a watering can with small coins coming out of it, there is a pile of bigger coins with a stem and plant growing out of the coins.

Nasdaq 

nasdaq_nam_q3_september_branded_article

Micro indexes are a popular low-capital investment option

Small but mighty

Lucy Brewster

Ever wish you could don a Patagonia vest, unleash a lengthy thread on X, and transform into a venture capitalist yourself?

A growing number of financial platforms are giving retail investors the opportunity to break into the coveted world of private markets, where traders take on heightened risk for a chance at a far greater reward.

Just look at SoFi, which today said it was adding private market funds that give clients access to high-flying companies that don’t trade publicly, like SpaceX, OpenAI, and Epic Games. Until now, SoFi offered private market access to investors who could throw down at least $25,000. Now, you need just 

Back in March, marketplaces like EquityZen and Forge Global 

 for individual investors to put money into private companies to just $5,000.

Last week, Robinhood took a different backdoor route, offering European investors equity “tokens” of OpenAI and SpaceX. But the plan came under fire when a clearly annoyed OpenAI 

 in a statement on X that Robinhood’s tokens “are not OpenAI equity” and warned investors to be careful. Shares of Robinhood sank 6% last Thursday morning after OpenAI shot back. European regulators, too, are scrutinizing Robinhood’s tokenization process, with the Bank of Lithuania saying it is “awaiting clarifications” 

 makes Robinhood’s kerfuffle look like no big deal. Linqto was one of the first companies to let retail investors trade shares of private companies, but today 

 and is reportedly under investigation by the SEC and DOJ for securities fraud and aggressive marketing to investors who aren’t eligible to buy private shares.

 Regular investors are vying for access to private markets for a reason: Once a successful startup goes public, it’s possible that its days of providing investors with exponential returns are over. And with the IPO pipeline stalled over the past few years, there are 

But as Matt Levine notes, the demand for private company shares 

 the supply. Most startups restrict early shareholders, including employees or angel investors, from selling their stock before the firm goes public, forming a gate that platforms like Robinhood, SoFi, and others are trying to unlock.—

Open AI and Space X logos locked in chains. 

You can invest in OpenAI now...sort of

A growing number of private companies are rushing to give investors a slice of private markets. 

Mark Reeth

Forget stock tokenization—the hottest trend in markets today is stock Tolkienization.

Palantir isn’t just a red-hot defense tech stock, it’s also the name of the “seeing stones” in J.R.R. Tolkien’s 

 series, capable of witnessing events of the past, present, and future around Middle Earth. Anduril isn’t just the tech company selling AI to governments, it’s also the name of Aragorn’s sword that was re-forged from the shards of Narsil.

 which isn’t just a digital bank serving startups and crypto companies that’s 

. It’s also the Elven name for the Lonely Mountain, home to the Dwarves of Durin.

So why are all these Tolkien references popping up in markets lately? Turns out, the Venn diagram of finance and Frodo overlaps with one person: Peter Thiel.

Thiel—the co-founder of PayPal, an early investor in Facebook, and a prolific venture capitalist—is a self-professed Tolkien superfan, and has a history of 

 after people, places, and things created by the esteemed British author.

Thiel founded Valar Ventures and Mithril Capital, which are VC firms, and also the names of godlike beings and a super-strong metal, respectively, in Tolkien’s universe. He’s in charge of Lembas LLC and Rivendell One LLC, holding companies for his other investments and also the respective names of Elven bread and an Elven sanctuary. And his Founders Fund is an investor in Erebor, the 

 being launched by billionaires including the co-founder of…Anduril. Got it?

Clearly, helping start Palantir and investing in both Anduril and Erebor was no happy coincidence. Thiel’s love of all things 

 has translated to a naming convention across the years that smacks of early Silicon Valley nerdiness and modern Silicon Valley’s 

While it seems unlikely that the staunchly anti-war Tolkien (who came to his stance after serving in the trenches in WWI) would endorse the idea of his creation providing the names to defense companies like Palantir and Anduril, considering how successful both have become, the parade of LOTR-inspired names is probably not ending any time soon. At this rate, it’s only a matter of time until there’s a stablecoin called Smaug or a cybersecurity company called Rohan.

The fellowship of the Middle Earth-themed startups

This is all Peter Thiel's doing...

With a slew of tariff deals seemingly on the horizon, Wall Street analysts are sprinting for their economic crystal balls in a 

It took only one trade deal for major banks to drop the doom and gloom tone. JPMorgan lowered its odds of a recession from 60% to 50% yesterday, while Goldman Sachs cut its recession forecast from 45% to 35%.

“The administration’s recent dialing down of some of the more draconian tariffs placed on China should reduce the risk that the US economy slips into a recession this year,” JPMorgan Chief US Economist Michael Feroli wrote in a note.

The pros are also revising their labor, growth, and inflation forecasts while they’re at it: Goldman Sachs lowered its unemployment rate expectations from 4.7% to 4.5%, dropped its PCE inflation prediction from 3.8% to 3.6%, and raised its GDP growth forecast from half a percentage point to 1% by the fourth quarter of this year.

A combination of a healthy labor market, slowing inflation, and dissipating recession fears means traders now expect the Federal Reserve to 

But don’t get too excited yet. After all, even though manufacturers importing from China aren’t going to be blown out of the water, they’re still going to bleed a little bit.

After the US and China decided to play nice yesterday, the S&P 500 leaped 3.3%, 

, and everyone was buying tech and consumer discretionary—aka growth stocks—instead of defensive picks like utilities, indicating that investors are once again all in on the US.

But savvy investors know it's not wise to jump on a bandwagon. After all, this is a trade war ceasefire, not a lasting peace agreement.

That’s why Goldman Sachs Chief US Equity Strategist David Kostin says to look for businesses with margins that are strong enough to deal with tariffs—no matter what size they are.

“We continue to recommend investors focus on stocks with high pricing power that can maintain margins in the face of elevated input costs,” Kostin wrote. “Despite the recent improvement in the growth outlook, tariff rates will likely be substantially higher in 2025 than they were in 2024, putting pressure on profit margins.”

A few specific stocks Kostin highlighted with high pricing power include Meta Platforms, Booking Holdings, Exelixis, Sherwin-Williams Company, Paychex, Altria Group, Antero Midstream Corp, and Dolby Laboratories.—

US and China trade deal stock market rally

How to invest after US & China trade deal: Goldman Sachs

8 stocks with margins strong enough to endure tariffs no matter what happens next.

Are we really back?

We’re not going to pretend there’s one silver bullet for protecting your portfolio from the S&P 500’s worst day since 2022. But analysts have some ideas about what corners of the market are safest during the tariff storm.

In fact, there are a handful of stocks that the pros think could actually benefit from tariffs. For instance, UBS analyst Jay Sole pointed to department stores TJX and Burlington as two stocks to buy. “Companies may have to either cancel orders or clear excess inventory in some other way. Off-price retailers like TJX and BURL typically outperform in times of dislocation,” he wrote in a note today. 

He isn’t the only one who thinks TJX is a buy: Citi analyst Paul Lejuez also upgraded the stock from neutral to buy, along with Ross

Stores, another discount big box retailer.

Charles Schwab Chief Global Investment Strategist Jeffrey Kleintop argued that 

international markets could be better positioned

 than domestic counterparts, despite the fact that tariffs could hurt them, too. This isn’t a new idea—European markets have already outpaced the S&P 500 in the first quarter of the year—but international investing is gaining popularity as investors parse through the effects of tariffs.

“In Europe, we favor beneficiaries of increased fiscal spending and small- to mid-cap stocks. And in Asia, we like Taiwan for its structural growth market and recommend defensive strategies centered on mainland China's state-owned enterprises,” echoed UBS’s CIO Solita Marcelli.

The only thing keeping analysts from declaring that all hell has officially broken loose is that most of them are seeing today’s tariff figures as a starting point for negotiations—something that the White House hasn’t confirmed.

“While uncertainty is currently high, we also believe that, at the margin, incremental news flow could become more supportive as we approach the second half of the year,” wrote Marcelli. “Now that the tariffs have been announced, negotiations to soften them can begin. Tariff revenue could be used to offset the cost of extending tax cuts. And we would expect the Fed to respond to weakening growth with interest rate cuts.”

 Equities have survived worse crashes, and while we’re likely wading into a period where there’s going to be more questions than answers for a while, staying invested is ultimately the smart move in the long run.—

How to invest after tariffs: Wall Street pros

Tariffs have arrived, but how should investors protect their portfolios?

Portfolio damage control

Tariffs in, tariffs out, geopolitics this, Trump that: When every headline about the economy is “who knows, anything could happen,” it’s probably time to rethink your investment strategy.

The pros are in agreement: Relying on AI growth stocks to carry your portfolio is 

last year, and guarding against volatility is now the name of the game. Which means it’s time for defensive—not to be confused with 

Sectors like healthcare, consumer staples, and utilities—which are considered defensive because they provide goods and services that are always necessary, no matter what happens to the economy—are 

“Defensive sectors rallied amid volatility (Staples +5.6%, Health Care +1.4%, Utilities +1.2%), while Real Estate also rallied on lower rates (+4.1%),” explained Bank of America strategists in a recent note. Meanwhile, growth is out: “On the other hand, the top three growth sectors from last year all fell in February: Consumer Discretionary (-9.4%), Communication Services (-6.3%) and Tech (-1.4%) and are the worst performers YTD.”

These were also some of the same sectors that performed well during the 2018 trade war, the Bank of America analysts noted.

When growth stocks are dominating the market, of course everyone wants to ride the wave up. But when major banks are checking off more and more 

 by the day, savvy investors search the corners of the market that are less reliant on the day-to-day ups and downs.

That’s why low beta—or less volatile—investments are in vogue at the moment. “Risk was in focus: The lowest beta quintile small caps outperformed the highest beta quintile by 11 percentage points. Utilities and Real Estate outperformed within both small and mid (and were the only sectors with positive returns in small caps), while Tech underperformed most [for the third consecutive month],” wrote BofA analysts.

Evercore analyst Julian Emanuel also picked out a slew of names in the Russell 3000 index that are low volatility. Some of the names include Apple, Abbvie, GoDaddy, CVS, Cigna, HP, 

Another way to play the moment is to look for defensive ETFs. Just yesterday, Goldman Sachs unveiled a timely set of 

 specifically designed to hedge against volatility. The so-called buffer funds operate by using derivatives to give investors some downside protection—which may be exactly what they need right about now.—

An arrow made of shipping containers hanging from a crane

How to invest with Trump tariffs

Wall Street pros say it's time to protect your portfolio

The best offense is a good defense

In our final edition of 2024, we asked our readers to predict what will happen to stocks in 2025—specifically, which stocks and sectors will be the highest performers of the new year, and whether or not the S&P 500 will surpass Wall Street’s average price target of 6,600.

Let’s keep everything honest and aboveboard and post some of the answers here so we can look back in December and see how right (or wrong) we all were.

63.8% of you believe the S&P 500 will close above 6,600

, while the rest of you are real party poopers.

When we asked which sectors or industries will outperform this year, most of you stuck with the pros and picked tech (AI, semiconductors, and a few even mentioned quantum computing), and energy (utilities, nuclear, oil & gas).

Here are some of our favorite outside-the-box answers from our readers:

: Lapping easy comps, growing global defense budgets, seen as a safety sector during cyclical upheaval.

: M&A kicks off again with fewer regulations, and real estate deals supporting AI datacenters adds an additional lending boost.

: Weak biotech performance driven by startups running out of cash and some poor GLP-1 results (in addition to increasing competition) weighed on HC. Stocks are priced to reflect these developments, but long-term secular growth in pharma spending should eventually take hold and drive gains in this undervalued area of the market.

We’d also like to give a special shoutout to the reader who told us, “Your momma is gonna see the biggest gains.” That one really hurt our feelings.

, the VAST majority of you stuck with what’s been working and chose either Nvidia or Palantir. A lot of people also mentioned MicroStrategy hitting new highs as bitcoin continues to rise.

These were some of the original stock picks and theses that caught our eye:

: Both go back what they’re best at and consumers see what was in both. Nike drives aspirations and McDonald’s gives value for consumers and brings traffic back to stores as the economic situation for low-income consumers heals and discretionary spending increases.

, because of new contracts from NASA and a successful IM-2 and IM-3 landings.

, because nuclear reactors require nuclear fuel and they're the second largest miner of uranium in the world.

: A young Dunkin / Starbucks that’s going to keep expanding and driving profitability as their new mobile ordering takes hold.

: Quantum computing company that is progressing quickly and their quantum computers do not require the prohibitively expensive refrigeration most other competitors' technology requires.

Finally, shoutout to the poor soul who wrote:

Walgreens, simply because I bought some in 2023 only for it to become one of the worst-performing stocks in 2024 and I could really use a break.

We’ve all been there, buddy. Stay strong.