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Market Watch: Geopolitics & Growth · The SPY Trader

0:00
Welcome to Spy Trader , your goto podcast for navigating the choppy waters of the stock market !
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I'm your host , Bucky Bucks , and it's 6 am on Friday , June 20th , 2025 , Pacific time .
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We've got a lot to unpack this morning , so let's dive right in to get you prepped for the trading day!The US stock market is showing a really mixed bag as of late .
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Yesterday , June 19th , the Dow Jones Industrial Average closed down a slight 0.10% at 42,171.66 .
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The Nasdaq Composite , however , managed a small gain , up 0.13% to 19,546.27 .
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The S&P 500 saw a marginal decline of 0.03% , closing at 5,980.87 .
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Looking at the broader US500 index this morning , we've seen it rise to between 6020 and 6025 points , gaining about 0.65% to 0.74% from the previous session .
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Over the last month , this index has climbed a solid 3.00% to 3.09% , and it's up a substantial 10.16% to 10.26% compared to this time last year .
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Sector performance on June 19th was quite varied .
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We saw positive moves in Real Estate , up 0.20% ; Utilities , up 0.27% ; Communication Services , up 0.08% ; and Technology , gaining 0.15% .
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On the flip side , Consumer Staples , Energy , Health Care , Industrials , and Materials all experienced slight declines .
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Financials and Consumer Discretionary remained effectively flat .
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Yeartodate , Industrials , Communication Services , and Utilities have been strong performers , while Consumer Discretionary and Health Care have seen some declines .
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Now , for the big headlines impacting the market .
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Geopolitical tensions continue to simmer , with the ongoing conflict between Israel and Iran creating unease for investors .
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There are reports that President Trump is considering a potential military strike on Iran , which is certainly adding to the uncertainty .
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President Trump's new tariffs and trade policies are also a key factor ; the Federal Reserve is closely watching how these will impact inflation , with expectations of nearterm price hikes for consumers .
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This has definitely contributed to market volatility .
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On the monetary policy front , the Federal Reserve maintained its policy interest rate range at 4.25% to 4.50% at its June 2025 meeting , as widely expected .
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The FOMC's updated projections still suggest two rate cuts are coming in 2025 , but the forecast for 2026 was reduced to just one cut .
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The Fed is taking a cautious approach , waiting for more data on inflation and the economic impact of those tariffs before making further moves .
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In company specific news , Marvell Technology , ticker MRVL , saw a jump of over 7% on June 18th , driven by optimism around its AI growth pipeline after an investor event .
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IBM , ticker IBM , reached an alltime closing high on June 18th , having gained nearly 30% since the start of 2025 , fueled by new software launches and advancements in quantum computing .
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Other notable movers yesterday included Coinbase Global , COIN , up 16.32% ; Caesars Entertainment , CZR , up 4.91% ; and Enphase Energy , ENPH , up 4.18% .
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Looking ahead , we've got big earnings reports next week from companies like Nike , Micron , and FedEx , which will give us more insights into retail demand , the trade war's effects , and semiconductor trends .
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From a macroeconomic perspective , the annual inflation rate for the US was 2.4% for the 12 months ending May 2025 , a slight uptick from April's 2.3% .
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Core inflation , which excludes volatile food and energy prices , held steady at 2.8% in May .
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Remember , the Fed's target is 2% .
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The US unemployment rate remained steady at 4.2% in May for the second consecutive month , right where experts expected it .
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Wage gains are still outpacing inflation at around 3.9% , which is good news for consumers .
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As for economic growth , the US economy actually contracted by 0.20% in the first quarter of 2025 over the previous quarter , marking the first quarterly GDP contraction in three years .
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However , the GDPNow model estimates for the second quarter are currently projecting a rebound with 3.4% growth .
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The Federal Reserve has slightly downgraded its GDP growth forecast for 2025 to 1.4% from its previous 1.7% , and for 2026 to 1.6%.So , what does all this mean for your money ?
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The current market is really a tugofwar .
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On one side , we have resilient economic fundamentals : a stable unemployment rate , positive real wage growth , and a projected rebound in Q2 GDP .
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These factors underpin consumer spending and indicate underlying economic strength .
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On the other side , we're battling increasing geopolitical and traderelated uncertainties .
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The Fed's cautious stance , holding rates steady and anticipating only two cuts this year , shows they're prioritizing inflation control amidst these uncertainties , even with a slight GDP growth downgrade for the year .
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The escalating tensions in the Middle East and the shifting sands of President Trump's tariff policies are creating significant headwinds .
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These external factors introduce volatility and can lead to sudden market shifts , which we've seen with cautious reactions to news about potential military action or new tariffs .
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When we look at sector performance , there's a clear preference for both defensive and growthoriented sectors .
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Technology and Communication Services are showing strength , likely benefiting from ongoing innovation , especially in AI .
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Utilities and Real Estate , often seen as safer havens , are also showing positive daily performance , perhaps signaling investors seeking stability .
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Conversely , energy and industrials saw slight declines , likely due to fluctuating oil prices influenced by geopolitical events and broader concerns about global economic growth impacting industrial demand .
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Considering all this , here are some general recommendations for investors .
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First , maintain diversification .
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In this environment of uncertainty and fluctuating data , a welldiversified portfolio across different sectors and asset classes is key to mitigating risk .
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Avoid putting all your eggs in one basket .
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Second , focus on quality and fundamentals .
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Prioritize companies with strong balance sheets , consistent earnings , and robust business models .
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These companies tend to be more resilient during choppy market waters .
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The upcoming earnings season will be crucial for assessing individual company performance .
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Third , keep a very close eye on macroeconomic data .
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Upcoming inflation reports , like the one due July 15th , employment data , and any communications from the Federal Reserve are critical .
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Any significant shifts could impact interest rate expectations and overall market sentiment .
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Fourth , consider defensive sectors .
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Given the ongoing uncertainties , sectors like Utilities , Consumer Staples , and Healthcare , which are generally less sensitive to economic cycles , could offer relative stability for your portfolio .
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Fifth , evaluate growth opportunities very carefully .
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While technology and communication services have shown strong performance , their valuations need scrutiny .
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Companies with clear growth drivers , such as advancements in AI , could continue to perform well , but be aware of potential overvaluation .
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Lastly , stay informed on geopolitical developments and trade policy .
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These external factors are proving to be significant market movers , so understand how potential escalations or policy changes could impact specific industries and your portfolio .
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And as always , remember to keep a longterm perspective .
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Despite shortterm fluctuations and uncertainties , a longterm investment horizon often helps ride out market volatility and achieve your financial goals .
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That's all for this edition of Spy Trader .
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I'm Bucky Bucks , and I wish you profitable trading !