AI Surges, Rates Drop: Tech Takes Flight

Fresh news and strategies for traders. SPY Trader episode #1437. The market rebounded sharply (Nasdaq up 2.7%, S&P up 1.6%) fueled by two major catalysts: soaring AI excitement (driven by Alphabet and Broadcom news) and a dramatic shift in Federal Reserve rate cut expectations. This riskon environment led to a heavy rotation into highgrowth technology. We outline trades for QQQ and GOOGL to capture the AI momentum, TLT to hedge the rate cut outlook, and core S&P 500 exposure for balance.

Episode Transcript

(00:00):
Welcome back to Spy Trader , the podcast that wakes up before Wall Street does .
I'm your host , Rocky BalBULLoa , and it's 5 am on Tuesday , November 25th , 2025 , Pacific time .
We are kicking off this holidayshortened trading week with a roar .

After a rough patch last week where the Nasdaq and S&P 500 pulled back nearly 3% and 2% respectively , the bulls are back in full force , driven by two simple factors (00:19):
AI excitement and the sweet promise of lower interest rates .
Yesterday’s trading session saw the Nasdaq Composite surge 2.7% , leading the charge , with the broader S&P 500 gaining a substantial 1.6% .

(00:48):
The Dow , which has less highgrowth tech concentration , trailed but was still positive , up 0.4%.This sharp pivot is a classic riskon move , and the catalyst is crystal clear .
On the macroeconomic front , we've had a dramatic shift in interest rate expectations .
Influential Federal Reserve figures , including New York Fed President John Williams and Fed Governor Christopher Waller , have made comments suggesting they support a rate cut in the near term , citing concerns about a softening labor market .

(01:22):
This has sent rate cut odds soaring .
Market pricing for a 25 basis point cut at the upcoming December Federal Reserve meeting has surged to roughly 77% to 85% , up dramatically from just a few days ago .
The prospect of cheaper money is catnip for highgrowth stocks .
When we look at sector performance , this story holds up perfectly .

(01:45):
Technology , embodied by the Technology Select Sector SPDR Fund or XLK , led the market with a 2.41% gain .
Consumer Discretionary followed close behind , benefiting from economic optimism , up 1.31% .
On the flip side , we saw a clear rotation out of defensive assets .

(02:08):
Consumer Staples , represented by XLP , actually lagged the market , dropping 1.18% , as investors shed stability in favor of growth .
The rally was also highly concentrated around specific megacap winners .
Alphabet jumped 6.3% on positive commentary surrounding its new flagship AI model , Gemini 3 .

(02:32):
Broadcom was even hotter , surging a massive 11% following news of a reported massive AI chip order , showing that infrastructure spending is alive and well .
Even Tesla climbed nearly 7% after CEO Elon Musk suggested the company is progressing toward building its own AI chips at massive scale .

(02:52):
And yes , even Nvidia , which saw some profittaking last week despite blockbuster earnings , is recovering , rising 2% as the AI growth narrative takes hold again .
So , what do we do with this sudden , powerful momentum ?
Our recommendations are focused on participating in the current themes while managing underlying volatility .

(03:14):
First , you must participate in the AIdriven tech rally , but perhaps with a blend of concentration and diversification .
The easiest way to grab this concentrated growth is through the Invesco QQQ Trust , which tracks the Nasdaq100 and holds those highflying stocks like Alphabet and Nvidia .

(03:35):
For direct exposure to the latest catalyst , consider Alphabet , ticker GOOGL , as its recent stock jump directly reflects the perceived value of the new Gemini 3 AI model .
Second , we need to position for that high probability of a rate cut .
If the Fed cuts rates , it doesn't just help stocks ; it helps bonds , particularly longerduration bonds , which are sensitive to falling yields .

(04:02):
Consider the iShares 20 Year Treasury Bond ETF , TLT , as a hedge that benefits directly from this shift in monetary policy .
Finally , remember that the market was just selling off last week , showing sentiment is brittle .
Always maintain a core diversified portfolio .

(04:23):
Funds like the iShares CORE S&P 500 ETF , IVV , or the Vanguard S&P 500 ETF , VOO , provide essential exposure to the broader market and neutralize singlestock risk while still capturing the overall recovery .
That’s all the time we have for this quick market blast .
Stay nimble , stay informed , and always remember to trade wisely .

(04:48):
I’m Rocky BalBULLoa , and we’ll catch you on the next episode of Spy Trader .