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The 7,000 TugofWar: Navigating Tariffs and AI Exhaustion · The SPY Trader

• 0:00
  Good morning , traders !
• 0:02
  It is 5 am on Wednesday , March 4th , 2026 , here on the Pacific Coast .
• 0:08
  I am your host , Sunny Skies , and you are listening to Spy Trader , your goto guide for navigating the financial waves .
• 0:15
  We have a lot to unpack this morning as the market tries to find its footing in this complex soft landing phase .
• 0:22
  Grab your morning beverage of choice , and let’s get into the numbers .
• 0:27
  The big headline today is the S&P 500 hovering right near that psychologically massive 7,000 level .
• 0:35
  We closed recently at approximately 6,939 , but we are definitely seeing some jitters .
• 0:42
  Ever since global tariffs were hiked to 15 percent back on February 23rd , volatility has been the name of the game .
• 0:49
  We are essentially in a tugofwar between strong fiscal support and new trade headwinds .
• 0:56
  On one hand , the One Big Beautiful Bill Act is providing a massive tailwind with business and personal tax cuts , which should push our GDP growth to around 2.4 to 2.8 percent this year .
• 1:08
  On the other hand , those tariffs are creating a bit of a drag , leading to localized inflation in consumer goods .
• 1:16
  Looking at the sectors , Technology remains our primary engine , but folks , I think we are seeing some AI exhaustion .
• 1:24
  We had a strong earnings report from Nvidia on February 25th , which confirmed that AI infrastructure spending is still robust , but the narrative of a capex deceleration is starting to whisper through the halls of Wall Street .
• 1:38
  Don't forget , we are still recovering from that massive Microsoft selloff on January 29th , which was its worst day since the year 2000 .
• 1:47
  It is a reminder that even the giants can stumble .
• 1:51
  Elsewhere , things are looking a bit chilly .
• 1:54
  Health care is currently our laggard , with Q1 earnings estimates for the sector being slashed by over 13 percent .
• 2:02
  Energy and materials are also under pressure due to slowing global demand , and we saw Silver take a staggering 28 percent crash in late January , which really hurt related commodity instruments .
• 2:15
  Over at the Federal Reserve , they are keeping things steady .
• 2:19
  The interest rate is sitting at 3.5 to 3.75 percent , and the markets are pricing in a 90 percent chance that they will stay put at the upcoming March meeting .
• 2:29
  We are seeing a slow path to that 2 percent inflation target , with the current PCE sitting at 2.9 percent .
• 2:37
  Now , let’s talk about what this means for your wallet and your brokerage account .
• 2:41
  If you are holding broad market funds like VOO or the SPY ETF , my advice is to hold steady .
• 2:49
  We are trading at a forward pricetoearnings ratio of 21.6 , which is a bit high .
• 2:55
  Maintain these as your core , but I wouldn't be aggressively buying right at this 7,000 resistance level .
• 3:01
  For those looking for growth , I suggest a selective buy on the QQQ .
• 3:06
  Use the recent Microsoftled volatility to buy the dip in highconviction AI plays .
• 3:12
  One specific pick I like right now is Alphabet , ticker GOOGL .
• 3:18
  It is trading at a much more reasonable valuation than some of its peers while still being a core beneficiary of the AI supercycle .
• 3:26
  If you want to pivot toward quality and value , take a look at the Financial Select Sector SPDR , or XLF .
• 3:33
  Even though revisions have been down , the sturdy growth outlook and dividend yields provide a nice safety net if tech continues to correct .
• 3:42
  In the fixed income world , I recommend accumulating TLT .
• 3:47
  With a rate cut potentially coming in July , longterm Treasuries are offering very attractive yields right now .
• 3:54
  You can also look at AGG , the iShares Core U.S.
• 3:57
  Aggregate Bond ETF , to capture that 3.5 percent yield environment .
• 4:03
  A quick word of caution : stay away from real estate for now .
• 4:07
  The VNQ ETF is likely to underperform as elevated longterm rates keep pressure on REIT valuations .
• 4:16
  Finally , as we look toward the spring , I suggest keeping about 10 to 15 percent of your portfolio in cash or money market funds .
• 4:24
  This dry powder will be essential if the tariffinduced volatility creates a better entry point later this season .
• 4:31
  That is all for this morning’s update !
• 4:33
  I’m Sunny Skies , and this has been Spy Trader .
• 4:37
  Stay smart , stay patient , and I will see you in a few hours for the midday report .