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AI Drives the Rally: Chasing Cyclical Growth · The SPY Trader

• 0:00
  Good morning , traders !
• 0:02
  It's 5 am on Monday , November 3rd , 2025 , Pacific time .
• 0:07
  I’m your host , Barry Bullish , and welcome back to the Spy Trader podcast .
• 0:12
  We are starting the week riding a powerful wave .
• 0:15
  The US market is roaring , setting new records , largely ignoring some messy macroeconomic data .
• 0:22
  Let's dive into what's driving this relentless rally .
• 0:26
  Here’s the snapshot : The S&P 500 is sitting pretty at 6,840 , up 0.26% recently , and the Nasdaq Composite is the clear leader , up 0.61% and extending its incredible seventh consecutive monthly rise in October .
• 0:46
  This strength is fundamentally earningsdriven .
• 0:50
  About 80% of S&P 500 companies beat profit expectations last quarter , and the overall S&P 500 is tracking for a 13.8% yearonyear profit increase for the third quarter .
• 1:04
  The poster child for this is the AI trade , exemplified by Amazon , whose shares jumped nearly 10% after its Amazon Web Services cloud division reported 20% revenue growth , which topped expectations .
• 1:19
  Geopolitical good news also includes China suspending extra export controls on rare earths , easing trade tensions , but watch out : a prolonged US government shutdown is delaying crucial economic reports , like the monthly jobs data , creating uncertainty .
• 1:37
  Our analysis shows this is a very selective , riskon rally .
• 1:42
  Money is rotating heavily into cyclical growth .
• 1:46
  Consumer Discretionary , tracked by XLY , jumped 2.64% , thanks to those strong ecommerce profits , and Energy ( XLE ) is up 0.73% .
• 1:57
  These sectors show confidence in consumer spending and corporate resilience .
• 2:01
  Who is struggling ?
• 2:02
  Defensive sectors like Utilities ( XLU ) , down 0.69% , and Consumer Staples ( XLP ) , down 0.29% , are out of favor because investors are chasing growth , not safety .
• 2:17
  On the macro front , the Fed did cut rates to 3.75% to 4.00% in October , which is bullish , but inflation is sticky at a 3% annual rate .
• 2:27
  This sticky inflation suggests rate cuts might be slower than hoped , causing the 10year Treasury yield to tick up to 4.08% .
• 2:36
  The labor market is also slowing down , with unemployment rising to 4.3% , signaling overall economic deceleration .
• 2:45
  So , where do we put our capital ?
• 2:48
  The market is clearly rewarding highgrowth and AI exposure .
• 2:52
  My first recommendation is to maintain or add core exposure to the technology leaders through the Invesco QQQ Trust ( QQQ ) or the Technology Select Sector SPDR Fund ( XLK ) .
• 3:05
  The AI narrative , grounded by results like Amazon’s 20% cloud growth , is the strongest force .
• 3:11
  Second , for broad exposure , keep your foundation solid with the Vanguard S&P 500 ETF ( VOO ) .
• 3:20
  Third , tactically overweight the Consumer Discretionary Select Sector SPDR Fund ( XLY ) to benefit from ongoing consumer strength .
• 3:31
  Finally , a word on bonds : for stability , use the Vanguard Total Bond Market ETF ( BND ) , but if you are betting aggressively on longterm yields dropping significantly from 4.08% , the iShares 20 Year Treasury Bond ETF ( TLT ) is your tactical weapon , but approach that longduration trade with caution due to inflation uncertainty .
• 3:55
  Focus on the growth sectors this week .
• 3:57
  That's all for today , traders !
• 4:00
  Trade smart , stay bullish , and I’ll catch you next time on Spy Trader .