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Market Peaks & Prudent Plays · The SPY Trader

• 0:00
  Hello , Spy Trader listeners !
• 0:02
  It's 6 am on Friday , September 19th , 2025 , Pacific time , and I'm your host , Penny Stocker , here to give you the lowdown on what's moving the markets .
• 0:12
  Grab your coffee , because we've got a lot to cover as we navigate this exciting , yet complex , financial landscape .
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  First up , let's dive into the headlines .
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  The U.S.
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  stock market is absolutely buzzing , riding a wave of bullish momentum .
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  We saw the S&P 500 , Nasdaq Composite , and Dow Jones Industrial Average all hit fresh alltime closing highs yesterday , Thursday , September 18th .
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  The S&P 500 , for instance , closed at an impressive 6,631.96 points , marking its 25th record high this year , and it's up 12% yeartodate !
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  Even smaller capitalization stocks are joining the party , with the Russell 2000 index gaining 2.5% to reach an alltime high , its first since 2021 .
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  So , a broad market rally across the board , folks !
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  Diving into sector performance , technology continues to be the star player , driving much of this growth .
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  We're seeing strong contributions from semiconductor firms , both in the broader market and within small caps .
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  Companies like NVIDIA , NVDA , are still dominating the AI chip market , with demand from data centers and AI startups fueling record sales .
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  Earnings expectations for Q3 are particularly strong for tech , with anticipated growth of nearly 12% in both earnings and revenues .
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  The Financial sector is also showing some promising momentum , with projected Q3 growth of over 7% , beating initial expectations .
• 1:54
  This week's big news came from the Federal Reserve , which on September 17th , decided to lower its benchmark interest rate by 0.25 percentage points .
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  This is the first cut of the year , bringing the federal funds rate to a target range of 4% to 4.25% .
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  The Fed's dot plot suggests we might see at least another halfpoint of cuts by yearend , meaning two more quarterpoint reductions .
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  On the corporate side , Q3 earnings season is just around the corner , and we're eagerly awaiting results from tech giants like Apple , AAPL , Microsoft , MSFT , and NVIDIA , NVDA , which are all expected to deliver strong quarters .
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  Financial heavyweights like JPMorgan Chase , JPM , and Goldman Sachs , GS , will also give us key insights .
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  In a significant company event , Intel's stock surged by 22.8% yesterday after Nvidia announced a huge 5 billion dollar investment in the chipmaker for data centers and personal computers .
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  That's a partnership to watch !
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  And good news for Ionis Pharmaceuticals , IONS , which received EU approval for its drug TRYNGOLZA for a rare genetic condition .
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  Now , let's put on our analyst hats and dig into what all this means for you , our savvy traders .
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  The macroeconomic picture right now is a bit of a mixed bag , which calls for careful consideration .
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  While the stock market is celebrating record highs and a Fed rate cut , we're seeing some underlying currents that suggest cautious optimism is key .
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  Inflation , for instance , is still a bit sticky .
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  The Consumer Price Index rose 0.4% in August , bringing the 12month increase to 2.9% , with core inflation steady at 3.1% .
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  That's still above the Fed's 2% target , even with their preferred PCE inflation gauge forecast around 3% for 2025 .
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  And then there's the labor market .
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  It's showing signs of cooling down , with only 22,000 jobs added in August , and the unemployment rate rising to 4.3% , its highest since 2021 .
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  Longterm unemployment has also surged .
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  This is all happening while real GDP growth for 2025 is projected at a moderate 1.6% .
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  RBC Chief Economist Frances Donald describes the U.S.
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  economy as being in a ' stagflation lite ' phase , meaning growth is a bit below , and inflation a bit above , comfortable levels .
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  We also see a deepening ' Kshaped ' economic segmentation , where highincome households are doing great , but lowerincome households are feeling the squeeze .
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  Plus , those tariffs from the previous administration are still slowly pushing prices up .
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  All this means we're in a market characterized by a powerful equity rally , especially in tech , fueled by AI optimism and the Fed's recent dovish pivot .
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  But , high valuations and a weakening labor market suggest we need a strategic and diversified approach .
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  So , let's get to the good stuff : concrete recommendations for your portfolio !
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  First , capitalize on growth and innovation , but keep an eye on valuation .
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  The technology sector , especially anything related to Artificial Intelligence , remains a powerhouse and is expected to drive earnings growth .
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  While valuations are indeed high — the S&P 500 is trading at 22.5 times forward earnings compared to its 10year average of 18.5 times — the underlying trends of innovation are incredibly strong .
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  My recommendation : Maintain exposure to growth and technology .
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  Consider ETFs like the Invesco QQQ Trust ( QQQ ) for concentrated exposure to the Nasdaq100 , which is packed with tech .
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  For broader tech exposure , the Technology Select Sector SPDR Fund ( XLK ) is a great choice .
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  As a specific stock example , NVIDIA ( NVDA ) continues its strong run due to its dominance in AI chips .
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  Keep its longterm growth potential in mind , but also be aware of its current high valuation .
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  Microsoft ( MSFT ) is another strong contender with consistent cloud growth and AI integration .
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  Next , explore opportunities in smallcap stocks .
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  Smallcap stocks have recently outperformed larger companies in Q3 , particularly smallgrowth stocks .
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  This segment can really benefit from falling interest rates and a potentially reaccelerating economy .
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  My recommendation : For diversified exposure , consider a smallcap ETF .
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  The iShares Russell 2000 Growth ETF ( IWO ) could be a suitable option for smallgrowth companies , or for broader smallcap exposure , the iShares Russell 2000 ETF ( IWM ) is appropriate .
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  For specific stock examples , keep an eye on companies like Astera Labs ( ALAB ) and Credo Technology ( CRDO ) in the semiconductor space , which have been big contributors to smallcap gains .
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  Third , position for potential financial sector strength .
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  The Financial sector is showing positive earnings momentum and could benefit from further rate cuts , especially if they lead to a steeper yield curve , which is generally good for bank profitability .
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  My recommendation : Consider the Financial Select Sector SPDR Fund ( XLF ) for targeted exposure to large U.S.
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  financial companies .
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  For specific stock examples , JPMorgan Chase ( JPM ) and Goldman Sachs ( GS ) are bellwethers .
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  Their earnings reports provide crucial insights into the health of the U.S.
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  economy .
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  Fourth , exercise caution and diversify with fixed income .
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  Even with recent rate cuts , inflation remains a bit elevated , and the labor market is softening .
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  This ' stagflation lite' scenario , coupled with high equity valuations , means a degree of caution is warranted .
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  My recommendation : Maintain a diversified portfolio .
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  For stability and income , fixedincome ETFs are valuable .
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  Given the current interest rate environment , bond yields may gradually trend lower , but they are still attractive historically .
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  The iShares Core U.S.
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  Aggregate Bond ETF ( AGG ) or Vanguard Total Bond Market ETF ( BND ) offer broad exposure to investmentgrade bonds , providing a hedge against equity volatility and a source of income .
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  Consider allocating a portion to AGG to help dampen overall portfolio volatility .
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  Finally , consider international diversification .
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  While the U.S.
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  economy has outperformed , global diversification can help mitigate risks associated with domestic economic shifts and political factors , like those ongoing tariff discussions .
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  My recommendation : Incorporate international equity ETFs for geographic diversification .
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  The Vanguard FTSE Developed Markets ETF ( VEA ) for developed markets and the Vanguard FTSE Emerging Markets ETF ( VWO ) for highergrowth potential in emerging economies are solid choices .
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  For comprehensive international exposure , the Vanguard Total International Stock ETF ( VXUS ) is an option .
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  A specific ETF example that has reportedly outperformed is the VictoryShares International Value Momentum ETF ( UIVM ) , suggesting potential if emerging economies continue to grow faster .
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  To sum it all up , the U.S.
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  stock market is showing robust performance , mainly thanks to the technology sector and a more dovish Fed .
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  However , smart investors will stay vigilant regarding those elevated valuations , persistent inflation , and a cooling labor market .
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  A diversified approach , focusing on quality growth , selective smallcap exposure , and core fixedincome holdings , is your best bet in this dynamic environment .
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  That's all for this episode of Spy Trader !
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  I'm Penny Stocker , wishing you smart trades and prosperous investing .
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  We'll catch you again soon !