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Shutdown ShrugOff: Resilience and the Expected Fed Cut · The SPY Trader

• 0:00
  Good morning , traders !
• 0:01
  Welcome back to Spy Trader .
• 0:04
  I’m your host , Chip Munk , and it is 6 am on Monday , October 6th , 2025 , Pacific time .
• 0:11
  We are kicking off a brand new week , and the market is still catching its breath after setting those incredible , recent record highs .
• 0:18
  Right now , things are looking mixed but resilient as we navigate some tricky macroeconomic waters .
• 0:24
  The three major indices are showing slight movements this morning .
• 0:29
  The S&P 500 is fractionally higher , up about 0.07% , while the Nasdaq Composite is seeing mild gains , up close to 0.4% , driven by the continuing tech and AI momentum .
• 0:44
  But the real mover today is the Russell 2000 , the smallcap index , which is significantly outpacing the large caps , gaining over 0.72%.The immediate headwind everyone is talking about remains the US government shutdown .
• 1:01
  This is more than just political theater ; it's causing a ' data blackout .
• 1:05
  ' We are missing crucial economic reports , like the NonFarm Payrolls and key inflation data , which is highly inconvenient for the Federal Reserve and complicates their ‘ datadriven ’ approach .
• 1:17
  On the sector side , we are seeing a clear defensive shift combined with rate sensitivity .
• 1:22
  Utilities are the top performer , up 1.16% , as investors seek stable dividends and anticipate lower borrowing costs .
• 1:32
  Healthcare is right behind them , with major managed care companies like Humana , Centene , and Cigna all seeing substantial daily gains , with Humana specifically up over 10% .
• 1:45
  Technology , which has carried the market , is taking a breather , down about 0.53% in early trading , likely due to some profittaking after its massive rally .
• 1:56
  The core insight today is market resilience .
• 2:00
  Despite the data uncertainty , the market is confidently pricing in a high probability , 89% in fact , of a 25basispoint interest rate cut at the upcoming October FOMC meeting .
• 2:12
  This expected ‘ risk management cut ’ by the Fed is the main support structure holding up stock prices .
• 2:19
  The AI innovation tailwind remains strong , with speculation surrounding a potential deal between Advanced Micro Devices , or AMD , and OpenAI contributing to futures gains .
• 2:32
  However , not all tech news is positive .
• 2:35
  The semiconductor equipment makers , like Applied Materials and Lam Research , are facing headwinds and falling slightly due to projections that new US export rules will reduce their revenue .
• 2:47
  Let’s talk strategy .
• 2:48
  First , keep your core position in growth .
• 2:51
  Despite today’s dip , the secular AI story hasn't changed .
• 2:56
  We recommend holding or accumulating Technology and GrowthFocused ETFs like the Invesco QQQ Trust , which provides concentrated exposure to the giants driving this trend .
• 3:08
  Second , tactically overweight the strong sectors for stability and income .
• 3:13
  The rally in Healthcare is very clear , so use the Health Care Select Sector SPDR Fund , or XLV , to play the strength shown by companies like Humana and Cigna .
• 3:25
  Also , use the Utilities Select Sector SPDR Fund , XLU , as a defensive income play , since these stocks benefit when interest rates are expected to fall .
• 3:36
  Finally , for risk management , maintain some ballast with fixed income .
• 3:40
  Given the political uncertainty from the shutdown and the expected Fed easing path , investmentgrade bonds are prudent .
• 3:48
  The iShares Core U.S.
• 3:49
  Aggregate Bond ETF , AGG , is a solid choice to maintain downside protection .
• 3:56
  If the Fed follows through with those rate cuts , your bond holdings should see a boost .
• 4:02
  That’s all the time we have for today .
• 4:04
  Happy trading , and I’ll catch you next time on Spy Trader !