September 20, 2025 • 9 mins
Fresh news and strategies for traders. SPY Trader episode #1371.
Captain Candlestick analyzes a recordsetting week for the U.S. stock market, propelled by the Federal Reserve's 25 basis point rate cut and optimism around tech giants. While indices hit new highs, the episode highlights a weakening labor market, sticky inflation, and housing market pressures. Investment strategies include diversifying with an overweight on tech, smallcaps, gold, and fixed income, alongside warnings about stagflation and policy uncertainty.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back to Spy Trader , your friendly guide to navigating the ups and downs of the market !
I'm your host , Captain Candlestick , and it's 6 am on Saturday , September 20th , 2025 , Pacific time .
We've had quite a week , folks , so let's jump right into what’s been moving the needle!The past few days have been nothing short of spectacular for the U.S.
(00:23):
stock market .
We closed out a recordsetting week , largely thanks to the Federal Reserve's latest move and some serious optimism around our tech giants .
The Nasdaq Composite led the charge , soaring 2.2% for the week , while the S&P 500 rose a solid 1.1% to 1.2% , and the Dow Jones Industrial Average gained 1% to 1.1% .
(00:50):
All three of these big indices hit fresh alltime highs on Friday !
Over the past month , the S&P 500 has climbed 4.20% , the Dow 30 3.06% , and the Nasdaq 100 a fantastic 5.92%.When we look at sectors , Technology stocks were the clear leaders , with the Technology Select Sector SPDR Fund , ticker XLK , jumping 1.7% on Thursday .
(01:17):
Companies like Apple , ticker AAPL , and Oracle , ticker ORCL , saw good gains on Friday .
Industrials and Consumer Discretionary also showed positive momentum , but Energy stocks dipped around 1.45% on Friday .
The biggest news of the week was undoubtedly the Federal Reserve’s decision on September 17th to cut its benchmark interest rate by 25 basis points , setting the new target range for the federal funds rate at 4.00% to 4.25% .
(01:52):
This was the first rate cut since December 2024 and was widely expected due to signs of a weakening labor market .
The Fed also signaled that two more rate cuts are likely in 2025 , with another in 2026 .
This accommodative stance , even if some hoped for more aggressive cuts , is what has many investors cheering .
Now , for the economic backdrop (02:16):
inflation is still a bit sticky , with the U.S.
annual Consumer Price Index rising to 2.9% in August , matching estimates .
The Fed's preferred Personal Consumption Expenditures index is forecast to level off at 3% for 2025 , which is still above their 2% target .
(02:38):
On the employment front , things are softening .
Only 22,000 jobs were added in August , much less than expected , and the unemployment rate climbed to 4.3% , its highest since late 2021 .
This “ slow hiring , slow firing ” environment shows employers are being cautious .
(02:59):
Real GDP did rebound , increasing at an annual rate of 3.3% in the second quarter of 2025 after a dip in the first .
And the U.S.
trade deficit expanded in July to 78.3 billion as imports outpaced exports .
Several individual companies made headlines this week .
(03:19):
Intel , ticker INTC , absolutely surged nearly 23% on Thursday , its best day since 1987 , after Nvidia , ticker NVDA , announced a 5 billion investment to codevelop data center and PC chips .
This highlights the ongoing boom in semiconductors and AI .
(03:41):
FedEx , ticker FDX , also climbed after beating profit and revenue expectations .
Paramount Skydance , ticker PSKY , and Warner Bros.
Discovery , ticker WBD , both gained on Friday amid reports of a potential megamerger .
Apple , ticker AAPL , advanced as the new iPhone 17 hit stores with reports of strong demand .
(04:06):
On the flip side , Lennar , ticker LEN , the homebuilder , dropped 4.2% after reporting weakerthanexpected revenue , citing “ continued pressures of today’s housing market ” and needing to offer more incentives due to elevated mortgage rates .
DexCom , ticker DXCM , fell 11% after a shortseller report , and Cognizant Technology Solutions , ticker CTSH , dropped on news that President Trump might introduce a large application fee for H1B worker visas .
(04:40):
Alright , let's break down what all this means and where we might go from here .
The market is feeling pretty good right now , mostly driven by the Fed’s rate cut and the expectation of more easing .
This dovish pivot , which is a response to a weakening labor market even with inflation hanging around , has pushed equities higher , especially in growth sectors like tech .
(05:03):
The Fed's move is kind of like an “ insurance policy ” to prevent the job market from slowing down even more .
While inflation is still above target , the central bank seems to be prioritizing stable employment .
Lower interest rates generally support asset prices because borrowing costs decrease , and the present value of future earnings looks better .
(05:26):
However , Captain Candlestick sees a few clouds on the horizon .
First , there's a risk of stagflation – that's when you have rising inflation , like our CPI at 2.9% , alongside a slowing job market , like the 22,000 jobs added in August and 4.3% unemployment .
(05:46):
Second , Lennar’s results really highlight the ongoing weakness in the housing market , still feeling the pinch of elevated mortgage rates .
Third , we have policy uncertainty with potential tariff changes and new H1B visa policies creating headwinds for some industries .
And finally , some analysts worry the market might be a bit too optimistic , potentially overlooking these challenges , which could lead to a bit of a “ hangover ” later in September , a month that historically can be tough for stocks .
(06:18):
So , what's a savvy Spy Trader to do ?
Given all these dynamics – monetary easing trying to prop up a slowing economy – a diversified approach makes sense , leaning towards sectors that benefit from lower rates and ongoing innovation .
First , I'd say continue to hold broad market equity ETFs like SPY , IVV , or VOO for your core exposure .
(06:41):
These give you diversified access to the largecap U.S.
market , which is hitting records .
The S&P 500 is up 13.3% yeartodate , so don’t abandon a winner .
Second , overweight the Technology Sector , using ETFs like XLK or QQQ , but be selective with individual stocks .
(07:03):
Tech is leading the charge , and companies like Intel and those benefiting from AI investments are strong .
Focus on firms with solid fundamentals and innovative products .
Third , consider some smallcap exposure with ETFs like IWM , which tracks the Russell 2000 .
When rates are falling , smallcap companies often do well because they benefit from cheaper money to expand .
(07:29):
Even with some recent volatility , the longterm outlook for IWM could be positive .
Fourth , selective exposure to gold via ETFs like GLD can act as an inflation hedge and a safe haven .
With inflation still above target and economic uncertainty , gold has continued its sharp rally .
(07:50):
Fifth , keep some exposure to Fixed Income , through ETFs like AGG or BND , for stability and income .
Even though the Fed just cut rates , they signaled more cuts are coming , which could mean more bond rallies .
These funds offer diversification , especially if economic growth slows further .
(08:11):
Finally , I'd suggest avoiding overconcentration in highly ratesensitive sectors like Homebuilders , represented by an ETF like ITB , without careful thought .
Lennar’s performance tells us the housing market still has “ continued pressures ” from mortgage rates .
While rates are falling , the positive impact on housing might not be immediate or even across the board .
(08:36):
In a nutshell , the U.S.
stock market is riding a wave of good vibes from the Fed's rate cut , but the underlying economic picture — a slowing job market and persistent inflation — calls for a cautious yet opportunistic investment strategy .
Focus on those growth leaders , consider smallcap potential , and remember to keep some hedges against uncertainty .
(08:58):
That’s all for this episode of Spy Trader !
I’m Captain Candlestick , signing off .
Happy trading , everyone !
Welcome back to Spy Trader , your friendly guide to navigating the ups and downs of the market !
I'm your host , Captain Candlestick , and it's 6 am on Saturday , September 20th , 2025 , Pacific time .
We've had quite a week , folks , so let's jump right into what’s been moving the needle!The past few days have been nothing short of spectacular for the U.S.
(00:23):
stock market .
We closed out a recordsetting week , largely thanks to the Federal Reserve's latest move and some serious optimism around our tech giants .
The Nasdaq Composite led the charge , soaring 2.2% for the week , while the S&P 500 rose a solid 1.1% to 1.2% , and the Dow Jones Industrial Average gained 1% to 1.1% .
(00:50):
All three of these big indices hit fresh alltime highs on Friday !
Over the past month , the S&P 500 has climbed 4.20% , the Dow 30 3.06% , and the Nasdaq 100 a fantastic 5.92%.When we look at sectors , Technology stocks were the clear leaders , with the Technology Select Sector SPDR Fund , ticker XLK , jumping 1.7% on Thursday .
(01:17):
Companies like Apple , ticker AAPL , and Oracle , ticker ORCL , saw good gains on Friday .
Industrials and Consumer Discretionary also showed positive momentum , but Energy stocks dipped around 1.45% on Friday .
The biggest news of the week was undoubtedly the Federal Reserve’s decision on September 17th to cut its benchmark interest rate by 25 basis points , setting the new target range for the federal funds rate at 4.00% to 4.25% .
(01:52):
This was the first rate cut since December 2024 and was widely expected due to signs of a weakening labor market .
The Fed also signaled that two more rate cuts are likely in 2025 , with another in 2026 .
This accommodative stance , even if some hoped for more aggressive cuts , is what has many investors cheering .
Now , for the economic backdrop (02:16):
inflation is still a bit sticky , with the U.S.
annual Consumer Price Index rising to 2.9% in August , matching estimates .
The Fed's preferred Personal Consumption Expenditures index is forecast to level off at 3% for 2025 , which is still above their 2% target .
(02:38):
On the employment front , things are softening .
Only 22,000 jobs were added in August , much less than expected , and the unemployment rate climbed to 4.3% , its highest since late 2021 .
This “ slow hiring , slow firing ” environment shows employers are being cautious .
(02:59):
Real GDP did rebound , increasing at an annual rate of 3.3% in the second quarter of 2025 after a dip in the first .
And the U.S.
trade deficit expanded in July to 78.3 billion as imports outpaced exports .
Several individual companies made headlines this week .
(03:19):
Intel , ticker INTC , absolutely surged nearly 23% on Thursday , its best day since 1987 , after Nvidia , ticker NVDA , announced a 5 billion investment to codevelop data center and PC chips .
This highlights the ongoing boom in semiconductors and AI .
(03:41):
FedEx , ticker FDX , also climbed after beating profit and revenue expectations .
Paramount Skydance , ticker PSKY , and Warner Bros.
Discovery , ticker WBD , both gained on Friday amid reports of a potential megamerger .
Apple , ticker AAPL , advanced as the new iPhone 17 hit stores with reports of strong demand .
(04:06):
On the flip side , Lennar , ticker LEN , the homebuilder , dropped 4.2% after reporting weakerthanexpected revenue , citing “ continued pressures of today’s housing market ” and needing to offer more incentives due to elevated mortgage rates .
DexCom , ticker DXCM , fell 11% after a shortseller report , and Cognizant Technology Solutions , ticker CTSH , dropped on news that President Trump might introduce a large application fee for H1B worker visas .
(04:40):
Alright , let's break down what all this means and where we might go from here .
The market is feeling pretty good right now , mostly driven by the Fed’s rate cut and the expectation of more easing .
This dovish pivot , which is a response to a weakening labor market even with inflation hanging around , has pushed equities higher , especially in growth sectors like tech .
(05:03):
The Fed's move is kind of like an “ insurance policy ” to prevent the job market from slowing down even more .
While inflation is still above target , the central bank seems to be prioritizing stable employment .
Lower interest rates generally support asset prices because borrowing costs decrease , and the present value of future earnings looks better .
(05:26):
However , Captain Candlestick sees a few clouds on the horizon .
First , there's a risk of stagflation – that's when you have rising inflation , like our CPI at 2.9% , alongside a slowing job market , like the 22,000 jobs added in August and 4.3% unemployment .
(05:46):
Second , Lennar’s results really highlight the ongoing weakness in the housing market , still feeling the pinch of elevated mortgage rates .
Third , we have policy uncertainty with potential tariff changes and new H1B visa policies creating headwinds for some industries .
And finally , some analysts worry the market might be a bit too optimistic , potentially overlooking these challenges , which could lead to a bit of a “ hangover ” later in September , a month that historically can be tough for stocks .
(06:18):
So , what's a savvy Spy Trader to do ?
Given all these dynamics – monetary easing trying to prop up a slowing economy – a diversified approach makes sense , leaning towards sectors that benefit from lower rates and ongoing innovation .
First , I'd say continue to hold broad market equity ETFs like SPY , IVV , or VOO for your core exposure .
(06:41):
These give you diversified access to the largecap U.S.
market , which is hitting records .
The S&P 500 is up 13.3% yeartodate , so don’t abandon a winner .
Second , overweight the Technology Sector , using ETFs like XLK or QQQ , but be selective with individual stocks .
(07:03):
Tech is leading the charge , and companies like Intel and those benefiting from AI investments are strong .
Focus on firms with solid fundamentals and innovative products .
Third , consider some smallcap exposure with ETFs like IWM , which tracks the Russell 2000 .
When rates are falling , smallcap companies often do well because they benefit from cheaper money to expand .
(07:29):
Even with some recent volatility , the longterm outlook for IWM could be positive .
Fourth , selective exposure to gold via ETFs like GLD can act as an inflation hedge and a safe haven .
With inflation still above target and economic uncertainty , gold has continued its sharp rally .
(07:50):
Fifth , keep some exposure to Fixed Income , through ETFs like AGG or BND , for stability and income .
Even though the Fed just cut rates , they signaled more cuts are coming , which could mean more bond rallies .
These funds offer diversification , especially if economic growth slows further .
(08:11):
Finally , I'd suggest avoiding overconcentration in highly ratesensitive sectors like Homebuilders , represented by an ETF like ITB , without careful thought .
Lennar’s performance tells us the housing market still has “ continued pressures ” from mortgage rates .
While rates are falling , the positive impact on housing might not be immediate or even across the board .
(08:36):
In a nutshell , the U.S.
stock market is riding a wave of good vibes from the Fed's rate cut , but the underlying economic picture — a slowing job market and persistent inflation — calls for a cautious yet opportunistic investment strategy .
Focus on those growth leaders , consider smallcap potential , and remember to keep some hedges against uncertainty .
(08:58):
That’s all for this episode of Spy Trader !
I’m Captain Candlestick , signing off .
Happy trading , everyone !
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