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Market Pulse: Nvidia, Fed Rates, and Trade Tensions · The SPY Trader

• 0:00
  Hello , Spy Trader listeners !
• 0:02
  I'm your host , Wally Street , and it's 6 am on Wednesday , August 27th , 2025 , Pacific time .
• 0:10
  Grab your coffee because we've got a lot to unpack from the market's overnight moves and what's on the horizon for today .
• 0:17
  The US stock market is showing a cautious but resilient tone this morning .
• 0:23
  Futures for the Dow , S&P 500 , and Nasdaq 100 are pretty flat in premarket trading after some small gains yesterday , but don't let that fool you , we're still within 1% of new record highs and generally on track for a winning August , defying that old historical reputation for weakness .
• 0:41
  The S&P 500 had a fantastic July , up 2.17% , hitting 10 new record highs , and yeartodate it's up 7.78% .
• 0:53
  The Nasdaq also saw a robust 3.7% increase last month .
• 0:58
  Today's biggest market mover is undoubtedly Nvidia .
• 1:01
  Everyone is glued to their screens for their Q2 earnings report after the market closes .
• 1:06
  This is a huge test for the entire AI sector and the broader tech rally , with options traders expecting a potential stock swing of about 6% .
• 1:16
  Nvidia's stock has already climbed almost 39% over the past three months .
• 1:21
  But it's not all about Nvidia We've seen some other interesting moves this morning .
• 1:26
  MongoDB , for example , surged about 30% in premarket trading after reporting strong quarterly results for its cloud database service .
• 1:36
  Okta shares also rose over 5% after beating earnings estimates and raising its fullyear revenue outlook , showing strength in other tech pockets .
• 1:46
  PVH Corp also saw a jump after a significant earnings beat .
• 1:51
  Overall , Q2 earnings season has been quite positive , with approximately 80% of S&P 500 companies surpassing expectations .
• 2:01
  On the macroeconomic front , Federal Reserve Chair Jerome Powell signaled a possible interest rate cut at the September FOMC meeting , acknowledging rising risks to the labor market during his Jackson Hole remarks on August 22nd .
• 2:18
  Market participants are now pricing in a 60 to 87% implied probability of that September cut .
• 2:24
  However , Powell also hinted that the longterm ' neutral ' interest rate might be higher than in the 2010s , meaning rates might not return to prepandemic lows .
• 2:35
  Adding a layer of uncertainty , President Trump's recent move to dismiss Fed Governor Lisa Cook has heightened concerns about the Federal Reserve's independence .
• 2:46
  Inflation is still a watch item , with August 'nowcasts' showing annual CPI at 2.86% , Core CPI at 3.02% , and the Fed's preferred PCE index at 2.74% overall and 2.92% for Core PCE .
• 3:04
  All remain above the Fed's 2% target .
• 3:07
  Plus , US wholesale inflation , or PPI , unexpectedly surged in July .
• 3:14
  GDP growth rebounded strongly in Q2 2025 , growing at an annual rate of 3.0% , recovering from a 0.5% contraction in Q1 .
• 3:26
  But the Atlanta Fed's GDPNow model currently estimates Q3 growth at a more moderate 2.2% .
• 3:34
  The labor market is showing signs of moderation , with consumer confidence declining in August due to anxiety over a slowing job market .
• 3:44
  Nonfarm payrolls increased by only 73,000 in July , and the unemployment rate ticked higher to 4.2% .
• 3:52
  Finally , trade policy remains a concern , with President Trump's new 50% tariffs on Indian products and broader import taxes now in effect , raising worries about inflation and business uncertainty .
• 4:05
  So , what does all this mean for your portfolio ?
• 4:09
  The market is in a fascinating spot right now .
• 4:12
  We're seeing this tugofwar between a cautious investor sentiment and underlying resilience .
• 4:18
  On one hand , Fed Chair Powell's dovish remarks are a positive for the market , suggesting a potential rate cut as early as September to support a softening labor market .
• 4:29
  On the other hand , inflation remains stubbornly above the Fed's target , and wholesale prices surged , which means the Fed's job isn't done .
• 4:39
  Plus , Powell's hint about a higher longterm neutral rate suggests we might not see rates return to the ultralow levels we've grown accustomed to .
• 4:48
  The anticipation around Nvidia's earnings report is massive .
• 4:52
  It's not just about one company ; it's a barometer for the entire AI investment thesis and the broader techled rally .
• 5:00
  Its performance today could ripple across the market , especially impacting other growth stocks that have seen some intraweek weakness recently , like Meta .
• 5:10
  We've seen sector leadership rotating .
• 5:13
  Cyclical sectors like Real Estate , Energy , Materials , and Financials have shown strength lately , while Healthcare has struggled this year .
• 5:21
  Interestingly , Morningstar suggests that Healthcare , Energy , and Real Estate now appear undervalued , offering potential upside , especially compared to growth stocks which are still generally considered overvalued .
• 5:34
  Value stocks , on the other hand , are trading at a 7% discount .
• 5:40
  This divergence in valuations , coupled with the ongoing trade policy uncertainties and concerns about Fed independence , makes diversification absolutely key .
• 5:50
  So , let's talk about where to put your money .
• 5:52
  Given the mixed signals — a resilient but cautious market , easing labor , persistent inflation , and trade policy uncertainty — we suggest a diversified and strategically positioned approach .
• 6:05
  First , to hedge against inflation and uncertainty , consider an allocation to gold .
• 6:11
  The SPDR Gold Shares , GLD , can be a great way to gain exposure to gold bullion .
• 6:17
  And with value stocks currently trading at a discount , a broadbased value ETF like the Vanguard Value ETF , VTV , could offer a margin of safety .
• 6:28
  Second , let's look at those cyclical and undervalued sectors for potential upside .
• 6:33
  Healthcare , Energy , and Real Estate are worth considering given their undervalued status according to Morningstar and recent cyclical strength .
• 6:43
  For Healthcare , the Health Care Select Sector SPDR Fund , XLV , is a solid choice .
• 6:49
  In Energy , the Energy Select Sector SPDR Fund , XLE , aligns with recent outperformance .
• 6:55
  And for Real Estate , which could benefit from potential rate cuts , the Vanguard Real Estate ETF , VNQ , offers exposure to REITs .
• 7:05
  Third , you definitely want to maintain exposure to technology , but with caution and a focus on diversification .
• 7:13
  While megacap tech stocks like Nvidia have seen incredible runs , their valuations are high .
• 7:19
  Companies like MongoDB and Okta are showing strong individual performance , but broad diversification is key here .
• 7:26
  For diversified exposure , the Invesco QQQ Trust , QQQ , or the Technology Select Sector SPDR Fund , XLK , are good options , but remember their concentration in largecap tech .
• 7:42
  Nvidia , NVDA , remains a key player for AI exposure , but its high valuation means you should approach it with a longterm view and awareness of its sensitivity to news .
• 7:53
  Finally , consider fixed income for stability , but keep an eye on those rate expectations .
• 8:00
  While the Fed is signaling potential cuts , the idea that the ' neutral ' rate might be higher means bond yields could still be impacted .
• 8:09
  For broad fixedincome exposure , the iShares Core U.S.
• 8:12
  Aggregate Bond ETF , AGG , or the Vanguard Total Bond Market ETF , BND , are excellent core holdings .
• 8:21
  If you're looking to potentially benefit more significantly from falling longterm rates , should the Fed cut more aggressively , the iShares 20 Year Treasury Bond ETF , TLT , could be considered , though it does carry higher interest rate risk .
• 8:35
  To wrap it up , stay diversified across sectors and asset classes .
• 8:41
  Keep a close watch on the Federal Reserve's upcoming decisions and the ongoing developments in US trade policy , as these will be major market movers .
• 8:51
  And always focus on companies with strong fundamentals .
• 8:54
  That's all for this edition of Spy Trader .
• 8:57
  I'm Wally Street , and I'll catch you later today !