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Fed Cuts & AI Gains: The New Investment Playbook · The SPY Trader

• 0:00
  Welcome back to Spy Trader , the only podcast dedicated to navigating the volatility of the S&P 500 , with your host , Skip SPYder .
• 0:10
  It's 6 am on Tuesday , September 30th , 2025 , Pacific , and the market is still hovering near those alltime highs .
• 0:18
  We've got a lot to unpack today as the Fed continues to ease policy , but inflation remains sticky .
• 0:24
  First , let's hit the headlines .
• 0:26
  The overall trend is certainly bullish , folks !
• 0:30
  The S&P 500 has climbed nearly 3.68% just last month , and the Invesco QQQ Trust , focusing on tech , is up a massive 38% yeartodate .
• 0:42
  Economically , Q2 GDP was revised up to 3.8% , suggesting resilience , but overall growth is clearly moderating , sitting around 1.5% for the first half of 2025 .
• 0:58
  The big concern remains inflation : Core PCE is still elevated at 2.9% , well above the Fed's 2% target .
• 1:06
  Meanwhile , the labor market is softening , showing only 29,000 jobs added monthly over the last three months , which is exactly why the Federal Reserve delivered its first interest rate cut this month .
• 1:20
  Markets are now pricing in an 88% chance of another rate cut in October .
• 1:25
  This brings us to the core analysis .
• 1:28
  This market is highly concentrated and reliant on Technology , which acts as the latecycle growth engine .
• 1:35
  The new accommodative monetary policy — the rate cuts — is highly supportive of these highgrowth stocks because it lowers the cost of borrowing and raises their theoretical future value .
• 1:47
  Nvidia continues to drive returns , benefiting from that massive 100 billion AIrelated partnership .
• 1:56
  Both Microsoft and Apple are key drivers keeping the QQQ at record levels , benefiting from cloud and enterprise demand .
• 2:05
  However , volatility is still present : even Intel , despite announcing a 5 billion AI infrastructure pact , recently saw its stock drop 4% , illustrating how quickly sentiment can shift .
• 2:20
  Keep an eye on the defensive sectors like Utilities and the Energy Select Sector SPDR Fund , or XLE , which was recently down alongside US crude oil futures .
• 2:31
  We are seeing minor rotations , but the structural trend is clear : Tech rules .
• 2:36
  So , where do we put our money ?
• 2:38
  The current environment of decelerating growth , sticky inflation , and a newly cutting Fed demands a balanced approach focusing on GrowthataReasonablePrice , or GARP , and fixed income duration .
• 2:51
  For core growth exposure , stick with the leading instruments capturing AI and cloud expansion — that means the Invesco QQQ Trust , QQQ , or the Technology Select Sector SPDR Fund , XLK .
• 3:05
  If you need stability late in this cycle , look toward quality defensives , specifically the Health Care Select Sector SPDR Fund , XLV , which benefits from noncyclical demand .
• 3:16
  Crucially , with the Fed initiating rate cuts , we want duration .
• 3:21
  I recommend looking at the iShares 20 Year Treasury Bond ETF , TLT , as prices for longterm bonds typically rise when yields fall , providing a strong hedge .
• 3:32
  And finally , for your broad market anchor , keep it simple with the Vanguard S&P 500 ETF , VOO , to capture those overall market returns without paying high management fees .
• 3:43
  That's all the time we have for today .
• 3:46
  Trade smart , not hard , and I’ll catch you next time on Spy Trader .