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Transcript

The Fed’s Shifting Outlook · The SPY Trader

• 0:00
  Welcome back to Spy Trader , your goto podcast for navigating the markets .
• 0:05
  I'm your host , Sparky Spreads , and it's 6 am on Thursday , June 19th , 2025 , Pacific time .
• 0:14
  Hope you're ready for some insights , because while the US stock market is closed today in observance of Juneteenth National Independence Day , with both the NYSE and Nasdaq taking a break and reopening tomorrow , Friday , June 20th , there's still plenty to talk about from yesterday and what it means for the days ahead .
• 0:33
  Let's quickly recap what happened yesterday , Wednesday , June 18th .
• 0:38
  US stocks ended mixed after the Federal Reserve's big announcement .
• 0:43
  The Dow Jones Industrial Average slipped a bit , down 0.1 percent , or about 44 points , closing at 42,171.66 .
• 0:55
  The S&P 500 edged lower by a tiny 0.03 percent to 5,980.87 .
• 1:04
  But the Nasdaq Composite , our techheavy index , managed to claw out a slight gain , up 0.13 percent , or about 25 points , to settle at 19,546.27.The main event , of course , was the Federal Reserve's June 2025 FOMC meeting .
• 1:23
  The Fed decided to keep benchmark interest rates unchanged in the range of 4.25 percent to 4.5 percent for the fourth meeting in a row .
• 1:33
  Now , here's where it gets interesting : the Fed's projections , what they call the ' dot plot , ' still hint at two 25basispoint rate cuts in 2025 .
• 1:43
  However , they've dialed back the outlook for 2026 to only one cut , and more officials , seven out of 19 , now expect no rate cuts this year , up from just four in March .
• 1:56
  The market is still pricing in about a 70 percent chance of a rate cut in September .
• 2:01
  On the inflation front , the Fed raised its inflation projection for 2025 to 3.0 percent , up from 2.6 percent , and still higher than its 2 percent target .
• 2:13
  Federal Reserve Chair Jerome Powell specifically pointed out that inflation in goods prices is expected to accelerate due to the impact of President Donald Trump's tariffs .
• 2:25
  They also lowered their GDP growth forecast for 2025 to 1.4 percent , a notable drop from the earlier 2.1 percent , suggesting a slowing economy .
• 2:37
  The unemployment rate is now expected to reach 4.5 percent by yearend .
• 2:43
  Beyond the Fed , escalating geopolitical tensions in the Middle East , particularly the ongoing IsraelIran conflict , continue to weigh on investor sentiment , raising concerns about potential US involvement and the impact on crude oil prices .
• 3:00
  President Trump's tariffs , and the unclear inflation impacts from them , were also highlighted as sources of economic uncertainty .
• 3:08
  Looking at sectors yesterday , seven out of 11 S&P 500 sectors ended in the red .
• 3:15
  Technology was the standout performer , helping the Nasdaq close higher , while Energy led the declines .
• 3:22
  In the broader picture for May and June , technology has been super strong , with megacap tech stocks like NVIDIA seeing substantial gains .
• 3:31
  Consumer cyclicals also rose , largely thanks to Tesla .
• 3:35
  On the flip side , real estate and energy sectors remain significantly undervalued .
• 3:42
  And get this , for the first time in over three years , no new companies were added to the S&P 500 in its quarterly rebalancing , which is a bit of a headscratcher , indicating a period of what's called ' stasis .
• 3:55
  'As for specific companies , IBM shares rose yesterday to an alltime closing high , up nearly 30 percent since the start of 2025 , driven by new software launches for AI and advancements in quantum computing .
• 4:11
  Korn Ferry shares were up about 10 percent yesterday .
• 4:15
  Circle Internet Group stock jumped after the Senate passed stablecoin legislation .
• 4:20
  We also saw news that Robinhood launched new tools to attract traders .
• 4:24
  And some of our megacap friends like Amazon.com , Alphabet , and Meta have actually seen a shift in their classification from pure growth to partial value in the 2025 Russell Reconstitution , which means they're maturing a bit in their growth profiles .
• 4:41
  Alright , let's dive into what all this means .
• 4:44
  The US stock market is definitely in a period of heightened uncertainty .
• 4:48
  The Fed's decision to hold rates steady , combined with those upward revisions to inflation forecasts and downward revisions to GDP growth , points to a challenging economic environment .
• 5:01
  While the hint of two rate cuts in 2025 offers some hope , the Fed's overall