Earnings Boom Meets Rate Cut Hopes

Fresh news and strategies for traders. SPY Trader episode #1445. The market is tracking higher, fueled by resilient corporate earnings (Marvell, Boeing) and the high probability of an imminent Federal Reserve interest rate cut. While the S&P 500 flirts with new highs, leadership is broadening beyond megacap tech into cyclicals like Industrials (XLI) and Financials (XLF), alongside strong healthcare performance (XLV). The recommended strategy is Growth at a Reasonable Price (GARP) combined with tactical diversification, overweighting cyclicals and defensive growth sectors while maintaining core exposure to confirmed AI drivers.

Episode Transcript

(00:00):
Welcome back to Spy Trader , the podcast that wakes up before the market does .
I'm your host , Chip Dip , and it is bright and early , 5 am on Wednesday , December 3rd , 2025 , Pacific time .
We are tracking a decidedly upward trajectory this morning , with US stock futures edging higher , confirming the positive momentum we saw yesterday .

(00:24):
The S&P 500 is flirting with alltime highs , capping off a great 2025 driven by tech strength and , let's be honest , high hopes for a Fed pivot .
The big story powering us into the middle of the week is a potent cocktail of resilient corporate earnings and almost certainty that the Federal Reserve will deliver an interest rate cut very soon .

(00:47):
Markets are now pricing in an 89% probability of a 25 basis point cut next week .
That dovish outlook is fueling the riskon environment .
In company specific news , the AI infrastructure boom continues to deliver .
Marvell Technology , ticker MRVL , jumped nearly 10% in extended trading after giving a bullish forecast , especially for their data center segment .

(01:14):
Cybersecurity leader CrowdStrike also reported strong earnings , boosting sentiment in that space .
It wasn't just tech making moves , though .
Boeing , BA , soared over 10% on commentary suggesting stronger aircraft deliveries could significantly boost their free cash flow in 2026 .

(01:35):
Even the consumer sector showed some muscle , with American Eagle Outfitters rising 10% on positive projections for holiday sales .
Looking beyond the headlines , the current environment is less about pure megacap dominance and more about broadening leadership .
While Technology , led by the XLK ETF , remains the strongest performer yeartodate , its high valuation — a P/E over 30 — is prompting tactical rotation .

(02:04):
We are seeing strong momentum in cyclicals like Industrials , tracked by XLI , which was the secondbest performer in the last session , benefiting from good news like the Boeing update .
Health Care , XLV , is also acting as a strong outperformer lately .
This sector offers a great risk/return profile — it’s lower beta but still has strong growth potential .

The market is waiting on the ADP employment report today , and later this week , the allimportant PCE inflation data , but the main takeaway is simple (02:29):
strong earnings plus a dovish Fed equals higher stock prices .
So , what should Spy Traders be doing now ?
Our strategy remains Growth at a Reasonable Price , or GARP , combined with tactical diversification .

(02:53):
First , maintain your core exposure to the broader market to capture that yearend rally using something diversified like the Vanguard Total Stock Market ETF , VTI .
Second , we recommend overweighting those cyclical recovery plays .
The anticipation of a soft landing and falling shortterm rates make the Financial Select Sector SPDR Fund , XLF , and the Industrial Select Sector SPDR Fund , XLI , very attractive right now .

(03:23):
Third , utilize defensive growth via the Health Care Select Sector SPDR Fund , XLV .
This sector allows you to hold fundamental growth without taking on the extreme valuation risk of some of the highestflying tech names .
Finally , while we caution against being excessively overweight in the highestvalued tech names , you must maintain exposure to the confirmed AI drivers .

(03:49):
Look for specific individual names that are proving their strength , such as Marvell Technology , MRVL , which just confirmed the data center buildout story .
Also , keep an eye on longterm bonds .
With that Fed cut highly likely next week , tactical exposure to instruments like the iShares 20 Year Treasury Bond ETF , TLT , can act as a great portfolio diversifier .

(04:15):
That’s your market update for this morning .
Good luck with your trading , and we'll catch you on the next episode of Spy Trader .