Latest / The SPY Trader / Rate Cut Rally Hits the Tech Wall

Transcript

Rate Cut Rally Hits the Tech Wall · The SPY Trader

• 0:00
  Welcome to Spy Trader .
• 0:02
  I'm your host , Warren BuffIt , and it is 5 am on Thursday , December 11th , 2025 , Pacific Time .
• 0:10
  We are waking up to a mixed morning after the major rally triggered by the Fed .
• 0:15
  The market is taking a welldeserved breather , but parts of big tech are feeling some pain .
• 0:21
  Let’s dive into what’s moving the money .
• 0:24
  The biggest headline yesterday was , of course , the Federal Reserve , which cut the federal funds rate by a quarterpoint to a new range of 3.5% to 3.75% .
• 0:35
  This was the third cut of the year .
• 0:37
  Crucially , Chairman Powell delivered a less hawkish outlook than anticipated , stating that further rate hikes are ' unlikely .
• 0:45
  ' This dovish pivot renewed confidence and drove the S&P 500 up 0.67% yesterday , nearing an alltime high .
• 0:55
  However , the bullish sentiment hit a wall overnight due to singlestock volatility , particularly in the tech sector .
• 1:02
  Tech giant Oracle plunged more than 11% in extended trading after missing revenue estimates .
• 1:09
  Worse , they projected a substantial 15 billion increase in spending to fuel their AI ambitions .
• 1:18
  This disappointing earnings report and significant capital expenditure plan immediately created a headwind for the techheavy Nasdaq Composite , which is slightly down in early trade today .
• 1:31
  The key insight here is market bifurcation .
• 1:34
  The macro environment is fundamentally bullish , driven by the Fed’s accommodative stance , which lowers borrowing costs and supports broadmarket growth .
• 1:44
  But the Oracle miss has exposed a real fear : the ' profitability of artificial intelligence investments' when companies have to spend heavily to play the game .
• 1:54
  This has caused a sector rotation .
• 1:57
  While tech is under pressure , other sectors are shining .
• 2:01
  Industrials are rated Outperform , benefiting from economic growth and capital expenditure .
• 2:07
  Look at GE Vernova , which surged 15% after lifting its outlook and doubling its dividend on strong power demand .
• 2:16
  Health Care is also rated Outperform , providing a good defensive play .
• 2:21
  Given this setup , we remain fundamentally bullish on the overall market because of the Fed , but tactical caution is warranted today .
• 2:30
  First , maintain core broad exposure and buy the dip .
• 2:34
  The rate cut confirms a ' BuytheDip ' environment , so if the market pulls back , look to add to reliable , lowcost exposure like the Vanguard Total Stock Market ETF , VTI .
• 2:47
  Second , exploit the rotation into strength .
• 2:50
  While Tech resets , focus on those outperform sectors .
• 2:54
  We recommend overweighting the defensive and stable side , specifically through the Health Care Select Sector SPDR Fund , XLV .
• 3:04
  Finally , be cautious but hold Tech .
• 3:06
  The Oracle news creates uncertainty .
• 3:09
  While the longterm AI trend is intact , new purchases should wait until volatility subsides .
• 3:16
  Hold existing core positions in the Nasdaq 100 via the Invesco QQQ Trust , QQQ .
• 3:23
  The immediate risk here is high capital expenditure eating into profits .
• 3:29
  Also , keep an eye on your fixed income ; bonds like the iShares Core U.S.
• 3:33
  Aggregate Bond ETF , AGG , should continue to benefit from these rate cuts , providing great stability .
• 3:41
  That’s all for today .
• 3:43
  Remember , trade smart , not hard , and I’ll catch you next time here on Spy Trader .