Latest / The SPY Trader / Market Pulse: Highs, Tariffs & The Fed’s Next Move

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Market Pulse: Highs, Tariffs & The Fed’s Next Move · The SPY Trader

• 0:00
  Hello , Spy Traders !
• 0:02
  I'm your host , Bull Bearington , and it's 6 am on Friday , August 15th , 2025 , Pacific time .
• 0:08
  Grab your coffee , because we've got a lot to unpack from Wall Street's latest moves .
• 0:13
  We're talking market highs , economic curveballs , and what it all means for your portfolio .
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  Let's dive in !
• 0:19
  First up , a quick look at how the market ended its trading day yesterday .
• 0:24
  Wall Street closed mixed .
• 0:27
  The S&P 500 nudged up just 2 points , hitting a new closing high at 6,468.54 – pretty exciting stuff !
• 0:37
  However , the techheavy Nasdaq Composite dipped slightly by 2.47 points , ending at 21,710.67 , mostly due to some softness in technology stocks .
• 0:51
  The Dow Jones Industrial Average also slipped by 11.01 points , closing at 44,911.26 .
• 1:00
  Looking at the bigger picture for 2025 , the Nasdaq is up a solid 10% yeartodate , the S&P 500 has gained 7.8% , and the Dow is up 3.4% as of early August .
• 1:15
  Now , for sector performance , we've seen a bit of a shift .
• 1:19
  Industrials have been the star performers this year , returning a whopping 15.6% and even outpacing information technology .
• 1:28
  This is largely thanks to government spending and underlying growth trends , especially in areas like water and waste management , with companies like Republic Services , ticker RSG , showing real pricing power .
• 1:42
  Technology and Communication Services are still seeing big valuation increases , fueled by the excitement around Artificial Intelligence .
• 1:51
  Think Nvidia , ticker NVDA , Microsoft , ticker MSFT , Meta Platforms , ticker META , and Alphabet , ticker GOOGL .
• 2:01
  These ' Magnificent Seven' tech giants are still driving massive earnings growth , while the rest of the S&P 500 has seen only marginal gains .
• 2:10
  But yesterday , it wasn't all sunshine and rainbows across the board .
• 2:14
  Eight out of the 11 broad S&P 500 sectors closed in negative territory .
• 2:20
  The Materials Select Sector SPDR , ticker XLB , Industrials Select Sector SPDR , ticker XLI , and Consumer Staples Select Sector SPDR , ticker XLP , each dropped by about 1% or more .
• 2:36
  The Financials sector has had a good year , but some analysts are noting high valuations there .
• 2:41
  Meanwhile , investors have largely steered clear of Pharmaceutical and Biotech sectors due to uncertainties , including those new drug tariffs .
• 2:51
  Diving into some companyspecific news and events , the second quarter of 2025 brought strong corporate earnings .
• 2:58
  Over 80% of S&P 500 companies beat consensus estimates , with yearoveryear earnings growth topping 9% .
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  This has certainly helped propel the market to these record levels .
• 3:11
  However , the U.S.
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  economy is grappling with the implications of those tariffs imposed by the current administration .
• 3:20
  They're contributing to rising consumer costs and producer prices , creating what some call a ' pain delayed , not denied ' situation for inflation .
• 3:30
  These tariffs have also impacted trade balances , business confidence , and private domestic investment , which actually fell by 15.6% in the second quarter .
• 3:40
  Interestingly , the trade policy also led to a sharp drop in imports , which mechanically boosted Q2 GDP figures .
• 3:50
  On the corporate front , Intel shares , ticker INTC , surged over 7% yesterday following reports that the Trump administration is considering acquiring a stake in the company to help fund its Ohio chip manufacturing plants .
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  This is part of a broader push to boost domestic semiconductor production .
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  Earlier in August , Apple shares , ticker AAPL , also jumped after the company pledged to boost investment in domestic manufacturing .
• 4:20
  Not all news was great though ; Walt Disney Company , ticker DIS , stock declined despite beating earnings expectations , Cava Group , ticker CAVA , reported weakerthanexpected revenue , and CoreWeave saw a larger loss than anticipated .
• 4:35
  Now , let's zoom out to the macroeconomic landscape .
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  The U.S.
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  economy saw a significant rebound in the second quarter of 2025 , with real GDP expanding at an annual rate of 3.0% .
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  That's a big improvement from a 0.5% contraction in the first quarter .
• 4:54
  This growth was largely driven by a sharp decrease in imports and a modest 1.4% increase in consumer spending .
• 5:02
  But , and this is a big but , some analysts suggest this rebound might be an ' economic mirage , ' as that decline in imports artificially inflated the GDP figure .
• 5:12
  Underlying domestic demand actually grew at its slowest pace in two and a half years .
• 5:19
  Thirdquarter GDP growth is currently estimated at 2.5% .
• 5:24
  Inflationary pressures remain a key concern .
• 5:27
  The Consumer Price Index for July 2025 stayed steady at 2.7% yearoveryear .
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  However , core CPI , which strips out volatile food and energy , rose 3.1% in July , a faster pace than June .
• 5:44
  And here's the kicker : the Producer Price Index for July rose a significant 0.9% , far exceeding the 0.2% consensus estimate .
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  Core PPI also showed a notable increase .
• 5:58
  These figures , especially the PPI , have reignited worries about the full impact of tariffs on consumer prices .
• 6:06
  The U.S.
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  labor market is showing signs of cooling .
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  The unemployment rate ticked up slightly to 4.2% in July from 4.1% in June , right in line with expectations .
• 6:20
  Job creation has slowed dramatically , with total nonfarm payroll employment gaining only 73,000 jobs in July , and both May and June figures were revised downwards .
• 6:33
  The number of longterm unemployed , meaning 27 weeks or more , increased to 1.8 million in July , which is nearly a quarter of all unemployed people , the highest percentage since February 2022 .
• 6:47
  Regarding interest rates and the Federal Reserve , the Fed has held the federal funds rate steady at a target range of 4.25% to 4.5% throughout 2025 so far , following three cuts in late 2024 .
• 7:02
  Despite the recent hotterthanexpected inflation data , especially from the PPI , market sentiment still indicates a very high probability , between 89% and 97% , of a rate cut at the September 2025 Fed meeting .
• 7:19
  However , there's some internal division within the Fed , and some economists , like those at Morgan Stanley , disagree with the market's expectation for a September cut .
• 7:30
  U.S.
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  Treasury Secretary Scott Bessent has even explicitly called for a 50basis point rate cut in September and a series of cuts , citing that revised labor market data .
• 7:41
  Finally , consumer sentiment improved in July to a fivemonth high of 61.7 , with current conditions rising , though expectations fell slightly .
• 7:51
  While improving , overall sentiment remains broadly negative , though worries have softened since April .
• 7:57
  Given these complex market dynamics , a balanced approach is key .
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  Diversification is always wise , especially with all these economic crosscurrents .
• 8:08
  For broad market exposure , maintaining core positions in broadmarket ETFs is prudent .
• 8:13
  Think of the SPDR S&P 500 ETF Trust , ticker SPY , iShares CORE S&P 500 ETF , ticker IVV , or Vanguard S&P 500 ETF , ticker VOO .
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  These track the S&P 500 and give you exposure to 500 large U.S.
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  companies .
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  For even wider exposure across large , mid , and smallcap stocks , the Vanguard Total Stock Market ETF , ticker VTI , gives you comprehensive coverage of the entire U.S.
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  stock market .
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  Now , for sectorspecific opportunities .
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  Industrials , given their strong yeartodate outperformance and underlying growth , look compelling .
• 8:56
  Consider the Industrial Select Sector SPDR Fund , ticker XLI , for diversified exposure .
• 9:04
  Within industrials , remember Republic Services , ticker RSG , for its strong pricing power .
• 9:10
  Technology and Communications are still benefitting from the AI boom , but their high valuations warrant a cautious approach .
• 9:18
  If you're comfortable with higher risk , the Invesco QQQ Trust , ticker QQQ , or the Technology Select Sector SPDR Fund , ticker XLK , could be considered .
• 9:31
  Just keep an eye on that concentration risk from the ' Magnificent Seven ' stocks like Nvidia , Microsoft , and Meta .
• 9:38
  They are driving a lot of the AI gains , but at a premium .
• 9:42
  With growth stocks trading high , value stocks appear attractively valued .
• 9:47
  Explore valuefocused ETFs that provide exposure to companies trading below their intrinsic value .
• 9:54
  This strategy could offer a margin of safety .
• 9:58
  Healthcare , specifically pharmaceuticals and biotech , has been overlooked due to those tariff uncertainties .
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  If these uncertainties dissipate , these sectors could present a longterm value opportunity .
• 10:10
  The Health Care Select Sector SPDR Fund , ticker XLV , offers broad exposure if you want to capitalize on a potential rebound .
• 10:19
  For fixed income , with that high probability of a Fed rate cut in September , bonds could offer increased stability and income potential .
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  For broad , diversified exposure to U.S.
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  investmentgrade bonds , consider iShares Core U.S.
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  Aggregate Bond ETF , ticker AGG , or Vanguard Total Bond Market ETF , ticker BND .
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  These are solid core bond holdings .
• 10:44
  If you believe in sustained lower longterm interest rates beyond initial cuts , then the iShares 20 Year Treasury Bond ETF , ticker TLT , which focuses on longterm U.S.
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  Treasury bonds , could be considered , though it's more sensitive to rate changes .
• 11:01
  Finally , don't forget alternative asset classes for diversification and as an inflation hedge , especially with persistent inflation and economic uncertainties .
• 11:11
  SPDR Gold Shares , ticker GLD , provides exposure to gold bullion , which is a traditional hedge .
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  And the Vanguard Real Estate ETF , ticker VNQ , invests in REITs , offering exposure to commercial real estate and potential income .
• 11:30
  Remember to keep an eye on a few key risks : tariff escalation and its impact , a continued deterioration in the labor market , any deviation from market expectations by the Federal Reserve , and that concentration risk in equities where a few megacap tech stocks wield a lot of influence .
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  That's all for today's Spy Trader .
• 11:51
  Stay safe out there , do your homework , and I'll catch you next time !