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New Highs & Rate Cut Hopes: The AI Fueling the Bull Market · The SPY Trader

• 0:00
  Welcome back to Spy Trader .
• 0:02
  I'm your host , Barry Bullish , and it's 6 am on Thursday , October 2nd , 2025 , Pacific .
• 0:09
  We are diving into a market that continues to defy gravity , shrugging off both political drama and soft economic data like they are yesterday's headlines .
• 0:18
  The main benchmarks , the S&P 500 and the Dow , recently hit new record highs , driven by cautious optimism and strong corporate results , particularly out of the technology sector .
• 0:31
  The S&P 500 ETF , SPY , is trading firmly near its alltime peak , up 13.7% yeartodate , showing incredible resilience .
• 0:41
  Let's break down the noise .
• 0:43
  The big story that seems to be no story at all is the US government shutdown , which is currently underway .
• 0:50
  Historically , the market tends to largely ignore these events , and true to form , investors have mostly shrugged it off .
• 0:57
  Separately , we got some discouraging labor news .
• 1:01
  The ADP report showed an unexpected loss of 32,000 privatesector jobs in September , the biggest decline in over a year .
• 1:10
  Despite this softness , the Nasdaq , tracked by QQQ , rose 0.4% , continuing its outperformance with a 17.3% YTD gain .
• 1:20
  Tech remains the champion .
• 1:22
  The Information Technology sector , XLK , is the YTD leader , up over 22% this year , fueled by the relentless AI boom .
• 1:33
  Nvidia , a key AI beneficiary , recently rose over 2.5% to hit a new record high .
• 1:41
  Not all news was techcentric , though .
• 1:43
  Consumer discretionary saw a bright spot with Nike shares jumping more than 6% after reporting a surprising quarterly sales increase , suggesting some pockets of consumer resilience are holding up .
• 1:57
  Meanwhile , Health Care , tracked by XLV , posted the strongest daily gain , up 3.01% , boosted by specific positive news for pharmaceutical stocks like Merck and Biogen regarding a new drug pricing initiative .
• 2:13
  Our analysis suggests that the market is currently laserfocused on two key drivers : AIfueled growth and the Federal Reserve's stance .
• 2:23
  The weak labor data , while concerning for the economy , has reinforced expectations for continued interest rate cuts by the Fed , which generally provides a tailwind for stock valuations .
• 2:35
  This explains why the market is dismissing the government shutdown ; historical data shows the S&P 500 , on average , gains 0.3% during such closures .
• 2:49
  Furthermore , strong economic growth , evidenced by the final Q2 GDP revision up to a robust 3.8% annualized rate , provides a solid floor under stocks .
• 3:00
  For trading recommendations , first , you must maintain exposure to secular growth .
• 3:05
  The AI story is still driving the bus .
• 3:08
  Use the Invesco QQQ Trust , QQQ , for concentrated exposure to megacap tech , or selectively add to dominant players like Nvidia , which continues to hit new records .
• 3:21
  Second , increase your defensivegrowth allocation .
• 3:24
  The Health Care sector is attractive right now .
• 3:27
  Consider adding to the Health Care Select Sector SPDR Fund , XLV , or looking specifically at stocks like Merck , which are benefiting from recent positive regulatory catalysts .
• 3:39
  Third , be cautious in fixed income .
• 3:42
  Inflation is sticky , with core PCE at 2.9% , even as the Fed cuts rates .
• 3:49
  Avoid longduration volatility like the iShares 20 Year Treasury Bond ETF , TLT .
• 3:55
  Instead , favor shortertointermediate aggregate funds for stability and income , such as the Vanguard Total Bond Market ETF , BND .
• 4:05
  Finally , keep your core diversified .
• 4:08
  Don't panic over the shutdown .
• 4:10
  Maintain your longterm position in broad market funds like the SPDR S&P 500 ETF Trust , SPY , to capture the market's underlying momentum .
• 4:21
  That's it for this edition of Spy Trader .
• 4:23
  Trade smart , stay bullish , and we'll catch you on the next move .