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Record Highs: Jobs Fuel the Rally · The SPY Trader

• 0:00
  Hello and welcome to Spy Trader , your goto podcast for navigating the ins and outs of the stock market .
• 0:07
  I'm your host , Penny Wise , and it's 6 am on Saturday , July 5th , 2025 , Pacific time .
• 0:15
  We're here to give you the freshest take on what's driving the market as we head into the weekend .
• 0:20
  What a week it's been in the U.S.
• 0:22
  stock market !
• 0:24
  Major indices have been absolutely soaring , hitting new record highs , and there's a good dose of optimism floating around , primarily fueled by some positive economic data and a glimmer of hope on the trade front .
• 0:38
  However , as always , there are some underlying concerns and specific company stories that add a bit of spice to the mix .
• 0:46
  Let's dive into a quick summary of what happened .
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  The major U.S.
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  stock indexes posted solid gains during this shortened trading week , which wrapped up early on July 3rd for the Independence Day holiday .
• 0:59
  The S&P 500 was a real standout , rising 1.72% for the week and closing at a new record high of 6,227.42 .
• 1:11
  It even continued its climb on July 4th , reaching 6,279 points .
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  For May 2025 , it clocked a fantastic 6.15% monthly return .
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  The techheavy Nasdaq Composite also hit new record highs , gaining 1.62% for the week and closing at 20,393.13 on July 3rd .
• 1:35
  Not to be left out , the Dow Jones Industrial Average rose 2.3% for the week , getting very close to its alltime high set back in December .
• 1:46
  Looking at the yeartodate performance for 2025 , the S&P 500 and Nasdaq are up nearly 7% , while the Dow has climbed 5.4% .
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  The second quarter of 2025 was particularly strong , with the S&P 500 surging nearly 11% and the Nasdaq soaring 18% .
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  Now , let's talk sectors .
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  Basic Materials led the charge , up 3.59% , closely followed by Financial Services , which rose 2.64% .
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  On July 3rd , Technology , Energy , and Materials also saw nice advances .
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  On the flip side , Utilities and Communication Services lagged a bit , and the Health Care sector even saw a decline on July 3rd .
• 2:37
  Moving on to the big news items and macroeconomic conditions , the highly anticipated June jobs report , released on July 3rd , showed strongerthanexpected job growth .
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  Total nonfarm payroll employment increased by 147,000 , surpassing predictions .
• 2:55
  The unemployment rate unexpectedly dipped to 4.1% in June from 4.2% in May , mainly because more unemployed folks found jobs .
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  Job gains were mostly in state government and health care , while federal government employment continued to decline .
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  While the headlines looked great , private sector hiring did slow down a bit .
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  Average hourly earnings increased by a modest 0.2% in June , a significant slowdown from earlier in the year .
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  When it comes to inflation , the annual rate for the U.S.
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  was 2.4% for the 12 months ending May .
• 3:34
  We're all waiting for the next Consumer Price Index , or CPI , update for June , which is due on July 15th .
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  The Federal Reserve has expressed concern that President Trump's tariffs could be bubbling up prices this summer .
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  At its June meeting , the Fed kept its target federal funds rate steady at 4.25% to 4.50% .
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  They did revise their 2025 Gross Domestic Product forecast downward and increased their yearend PCE inflation projection , again citing the anticipated impact of tariffs .
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  But here's the interesting part : the median Fed official still expects two quarterpoint rate cuts before the end of 2025 .
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  Federal Reserve Chair Jerome Powell emphasized that growth remains solid , but uncertainty is high , and the Fed will remain patient .
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  On July 1st , Powell couldn't confirm a July rate cut , saying the Fed would be carefully watching the labor market .
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  Trade policy and tariffs also played a big role .
• 4:38
  Optimism around potential trade deals , specifically with Vietnam and an anticipated deal with India , gave market sentiment a boost .
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  However , President Trump's looming July 9th tariff deadline is a major focus for investors , as these tariffs are expected to weigh on growth and push up prices .
• 4:58
  Plus , the ongoing discussions in Congress about President Trump's 'One Big Beautiful Bill ' , which includes provisions impacting renewable energy tax credits and the elimination of the 7,500 dollar EV credit , also caused some market ripples .
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  Now , let's talk about some specific companies that made headlines .
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  Datadog , ticker DDOG , saw its shares surge 15% on July 3rd after S&P Global announced its inclusion in the S&P 500 index on July 9th .
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  Tesla , ticker TSLA , had a volatile week , falling more than 5% on July 1st due to a public dispute between Elon Musk and former President Trump over the budget bill and EV credits .
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  However , Tesla also reported beating its secondquarter delivery estimates .
• 5:52
  Renewable energy stocks like First Solar and Enphase Energy saw significant gains on July 3rd , likely influenced by those discussions surrounding renewable energy tax credits and new taxes on imported renewables equipment within that pending ' Big Beautiful Bill ' .
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  Adobe , ticker ADBE , shares dropped 4.5% on July 3rd following rival Figma's IPO filing and some analyst downgrades due to increasing AI competition .
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  Nike , ticker NKE , the stock rose 4.1% on July 3rd , benefiting from the U.S.Vietnam trade deal .
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  Both Ford and GM saw their shares jump around 5% on July 1st after reporting strong secondquarter sales .
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  CrowdStrike , ticker CRWD , shares gained nearly 4% on July 3rd after an analyst price target increase .
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  And the technology giants Microsoft , ticker MSFT , and AMD , ticker AMD , continued to benefit from the AI rally , with Microsoft shares up 8% in June and AMD rising 28% last month after unveiling new GPUs .
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  So , what's behind all this market action ?
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  The U.S.
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  stock market's strong performance over the past few days can largely be attributed to the positive surprise in the June jobs report .
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  Those robust job creation figures and a declining unemployment rate instilled confidence in the economy's resilience , really encouraging investors to jump into riskier assets like stocks .
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  This was further bolstered by that optimism surrounding trade agreements , as reduced geopolitical and trade uncertainty typically supports global economic activity and corporate earnings .
• 7:45
  Even though the Federal Reserve held interest rates steady , the expectation of two rate cuts later in 2025 provided a somewhat dovish undertone , signaling that monetary policy might become more accommodating , which is generally quite favorable for stock valuations .
• 8:02
  However , the Fed's revised inflation forecasts , largely due to anticipated tariff impacts , highlight a persistent concern that could temper market enthusiasm if inflation proves stickier than expected .
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  The sector performance clearly reflected these themes .
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  Basic Materials and Financial Services likely benefited from the overall positive economic sentiment and the stable interest rate environment .
• 8:29
  Technology continued its strong run , largely due to the ongoing excitement around Artificial Intelligence advancements , although some individual tech stocks did face headwinds from competition or companyspecific controversies .
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  The underperformance of Utilities and Communication Services suggests a rotation away from those more defensive sectors , as investors chased growth opportunities .
• 8:55
  Companyspecific news , like Datadog's S&P 500 inclusion and strong automotive sales , provided microlevel catalysts , while the highprofile dispute involving Tesla underscored how individual company events and political headlines can introduce significant volatility even for market leaders .
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  So , with all that in mind , what are our recommendations for you , the savvy Spy Trader ?
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  First , monitor inflation data closely .
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  While the jobs report was strong , the Fed's concern about tariffdriven inflation remains .
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  That upcoming June CPI release on July 15th will be absolutely crucial .
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  If inflation proves persistent , it could delay Fed rate cuts , potentially creating headwinds for the market .
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  Second , evaluate your sector exposure .
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  Given the recent outperformance of Basic Materials and Financial Services , and the continued strength in Technology , consider maintaining exposure to these sectors .
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  However , given the broadening of market gains beyond just a few megacap tech stocks , look for opportunities in other growthoriented or cyclical sectors that might benefit from a stable economic environment .
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  Third , stay diversified .
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  Despite the positive momentum , uncertainties persist , including geopolitical risks and potential impacts of new tariffs .
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  A diversified portfolio across various sectors and asset classes can really help mitigate risks .
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  Fourth , assess companyspecific developments .
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  Individual company news , particularly earnings reports and policy impacts , like that ' Big Beautiful Bill ' on EV credits , can significantly influence stock performance .
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  Stay informed on companies within your portfolio .
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  And finally , rebalance periodically .
• 10:49
  With the market hitting new highs , it's a good time to review your portfolio .
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  Rebalancing can help ensure your asset allocation remains aligned with your longterm financial goals and risk tolerance , potentially allowing you to take some profits from overextended positions .
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  That's all for this edition of Spy Trader .
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  Thanks for tuning in , and remember to stay wise with your investments !