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The Great Rotation: Tech Cools as Financials and Small Caps Heat Up · The SPY Trader

• 0:00
  Hello everyone and welcome back to the Spy Trader podcast !
• 0:04
  I am your host , Penny Profitt , and I am so glad you could join me for your midafternoon market update .
• 0:10
  It's 2:30 pm on Thursday , June 4th , 2026 , here in sunny Pacific time , and boy , do we have a tale of two markets to talk about today .
• 0:21
  If you have been looking at your portfolio this afternoon , you might be seeing some very different colors depending on what you own .
• 0:28
  We are witnessing what experts are calling The Great Rotation .
• 0:32
  Essentially , investors are taking their chips off the table when it comes to highflying artificial intelligence stocks and moving that money into more traditional , steady sectors like banks and small businesses .
• 0:44
  To give you the big picture , the Dow Jones Industrial Average is absolutely soaring , up 874 points to a brand new record high of 51,561.93 .
• 0:59
  The S&P 500 is also having a nice day , up point four percent , which marks its tenth gain in the last eleven days .
• 1:07
  However , the techheavy Nasdaq is feeling a bit left out , slipping point one percent .
• 1:12
  The big story dragging down tech is Broadcom .
• 1:15
  Their stock , ticker AVGO , tumbled twelve point six percent today .
• 1:20
  Even though they beat earnings expectations , their revenue was a bit light and their CEO didn't raise their sales forecast for AI chips .
• 1:29
  This seems to have cooled off the AI euphoria we have seen lately in the Invesco QQQ Trust .
• 1:35
  On the flip side , the big banks are having a party .
• 1:38
  Bank of America , or BAC , is up three point four percent after announcing a cool new realtime payment service .
• 1:46
  Their friends over at Goldman Sachs and JPMorgan Chase are also up significantly .
• 1:52
  We are also seeing a nice bounce in smallcap stocks .
• 1:56
  The Russell 2000 , which you can track through the IWM ETF , jumped one point four percent today as Treasury yields dipped slightly .
• 2:05
  In the world of macroeconomics , things are still a bit sticky .
• 2:09
  Inflation is sitting at three point eight percent , which is still quite a bit higher than the Federal Reserve's target .
• 2:16
  Because of this , we expect the Fed to keep interest rates right where they are at their meeting later this month .
• 2:22
  We are also keeping a very close eye on the Middle East .
• 2:26
  There is some hope that the U.S.
• 2:28
  and Iran might reach an agreement to reopen the Strait of Hormuz , which actually caused oil prices to drop today and gave the Dow a nice relief rally .
• 2:36
  So , what does this mean for your trading strategy ?
• 2:39
  Based on today's action , I have a few recommendations to help you navigate this rotation .
• 2:45
  First , I suggest a tactical shift toward value and financials .
• 2:49
  The Financial Select Sector SPDR Fund , known as XLF , looks very strong right now .
• 2:56
  Large banks like JPMorgan are showing great stability and they actually benefit from these higher interest rates .
• 3:03
  Second , don't ignore the little guys .
• 3:06
  As bond yields stabilize , smallcap stocks are becoming much more attractive .
• 3:11
  You might want to look at the Vanguard Total Stock Market ETF , or VTI , to get exposure to the whole market catching up to those tech giants .
• 3:20
  Third , it is always a good idea to have a hedge .
• 3:24
  With inflation still high and global tensions ongoing , keeping a portion of your portfolio in hard assets like the SPDR Gold Shares , or GLD , is a smart way to protect yourself .
• 3:36
  Finally , take a peek at selective real estate .
• 3:40
  The Vanguard Real Estate ETF , ticker VNQ , is showing some signs of a floor , especially in industrial and retail spaces which have been much more resilient than office buildings lately .
• 3:52
  That is all for this update !
• 3:55
  It is a wild day out there , but there are plenty of opportunities if you know where to look .
• 4:00
  I am Penny Profitt , and this has been Spy Trader .
• 4:03
  Happy trading , everyone !