Rate Cut Rally Hits the Tech Wall

Fresh news and strategies for traders. SPY Trader episode #1453. The Federal Reserve's dovish rate cut fuels a bullish macro environment, but singlestock volatility, driven by Oracle's massive AI spending plans and revenue miss, creates a sharp bifurcation in the market. We break down the sector rotation away from tech and provide tactical strategies for buying the dip and leveraging strength in defensive sectors like healthcare.

Episode Transcript

(00:00):
Welcome to Spy Trader .
I'm your host , Warren BuffIt , and it is 5 am on Thursday , December 11th , 2025 , Pacific Time .
We are waking up to a mixed morning after the major rally triggered by the Fed .
The market is taking a welldeserved breather , but parts of big tech are feeling some pain .

(00:21):
Let’s dive into what’s moving the money .
The biggest headline yesterday was , of course , the Federal Reserve , which cut the federal funds rate by a quarterpoint to a new range of 3.5% to 3.75% .
This was the third cut of the year .
Crucially , Chairman Powell delivered a less hawkish outlook than anticipated , stating that further rate hikes are ' unlikely .

(00:45):
' This dovish pivot renewed confidence and drove the S&P 500 up 0.67% yesterday , nearing an alltime high .
However , the bullish sentiment hit a wall overnight due to singlestock volatility , particularly in the tech sector .
Tech giant Oracle plunged more than 11% in extended trading after missing revenue estimates .

(01:09):
Worse , they projected a substantial 15 billion increase in spending to fuel their AI ambitions .
This disappointing earnings report and significant capital expenditure plan immediately created a headwind for the techheavy Nasdaq Composite , which is slightly down in early trade today .

(01:31):
The key insight here is market bifurcation .
The macro environment is fundamentally bullish , driven by the Fed’s accommodative stance , which lowers borrowing costs and supports broadmarket growth .

But the Oracle miss has exposed a real fear (01:44):
the ' profitability of artificial intelligence investments' when companies have to spend heavily to play the game .
This has caused a sector rotation .
While tech is under pressure , other sectors are shining .
Industrials are rated Outperform , benefiting from economic growth and capital expenditure .

(02:07):
Look at GE Vernova , which surged 15% after lifting its outlook and doubling its dividend on strong power demand .
Health Care is also rated Outperform , providing a good defensive play .
Given this setup , we remain fundamentally bullish on the overall market because of the Fed , but tactical caution is warranted today .

(02:30):
First , maintain core broad exposure and buy the dip .
The rate cut confirms a ' BuytheDip ' environment , so if the market pulls back , look to add to reliable , lowcost exposure like the Vanguard Total Stock Market ETF , VTI .
Second , exploit the rotation into strength .

(02:50):
While Tech resets , focus on those outperform sectors .
We recommend overweighting the defensive and stable side , specifically through the Health Care Select Sector SPDR Fund , XLV .
Finally , be cautious but hold Tech .
The Oracle news creates uncertainty .
While the longterm AI trend is intact , new purchases should wait until volatility subsides .

(03:16):
Hold existing core positions in the Nasdaq 100 via the Invesco QQQ Trust , QQQ .
The immediate risk here is high capital expenditure eating into profits .
Also , keep an eye on your fixed income ; bonds like the iShares Core U.S.
Aggregate Bond ETF , AGG , should continue to benefit from these rate cuts , providing great stability .

(03:41):
That’s all for today .
Remember , trade smart , not hard , and I’ll catch you next time here on Spy Trader .