Rate Cuts Ahead: Market Highs and Tech Boom

Fresh news and strategies for traders. SPY Trader episode #1363. The market saw a mixed start after record highs on Thursday, with S&P 500 futures flat, Dow down 0.2%, and Nasdaq up 0.1%. Inflation remains elevated at 2.9% CPI in August. The Federal Reserve is widely expected to implement its first interest rate cut of the year (25 basis points) next week, driven by a weakening labor market with unemployment at 4.3%. The US economy expanded 3.3% in Q2, but growth is projected to slow. The Technology sector continues its strong run, fueled by AI optimism, with Oracle, Adobe, and Nvidia showing significant gains. The Healthcare sector rebounded in August and is considered undervalued, while Financial Services also saw gains.

Episode Transcript

(00:00):
Hey there , savvy investors and welcome back to Spy Trader with your host , Cash Flow Cody !
It's 6 am on Friday , September 12th , 2025 , Pacific time , and we've got a lot to unpack from the bustling world of finance .
The market is always on the move , and today's episode is packed with insights to help you navigate these choppy , yet exciting , waters .

(00:22):
Let's dive in !
Starting with the overall market , Wall Street saw a ' quietly mixed ' start this morning .
S&P 500 futures are flat , Dow Jones Industrial Average futures are down a slight 0.2% , and Nasdaq futures are ticking up 0.1% .
This comes right after a pretty spectacular Thursday , September 11th , where the Dow , S&P 500 , and Nasdaq Composite all closed at new record highs .

(00:53):
The Nasdaq even notched a record high on September 10th too .
Looking at the bigger picture , over the past month , the S&P 500 has gained 1.84% and the Nasdaq Composite is up 1.53% .
Our smallcap friends in the Russell 2000 , after a strong 7.1% jump in August , were down slightly by 0.61% yesterday .

(01:21):
Yeartodate , the S&P 500 is up a solid 12% , and the Nasdaq Composite is an impressive 14.15% higher , really showing the strength , especially in growth stocks .
But beneath these headline numbers , there's a fascinating tugofwar happening with macroeconomic conditions .

(01:41):
Inflation is still playing hard to get .
The annual US inflation rate , measured by the Consumer Price Index or CPI , accelerated to 2.9% in August , up from 2.7% in July , hitting its highest level since January .
That's mainly due to rising prices for gas , groceries , hotel rooms , and airfare .

(02:03):
Core CPI , which strips out those volatile food and energy costs , held steady at 3.1% .
Both are still above the Federal Reserve's 2% target .
The Producer Price Index , or PPI , saw a slight monthly decline of 0.1% in August , but was up 2.6% yearoveryear .

(02:26):
And those costs from President Trump's tariffs are being passed on to consumers , contributing to these inflationary pressures .
Now , for some potentially good news for borrowers , the Federal Reserve is widely expected to implement its first interest rate cut of the year at its upcoming Federal Open Market Committee , or FOMC , meeting next week , on September 1617 .

(02:51):
A quarterpoint cut , that's 25 basis points , is largely anticipated , which would move the federal funds rate from its current range of 4.25%4.50% .
This expectation has already nudged mortgage rates lower , with the average 30year fixed home loan falling to 6.35% for the week ending September 11th , marking the largest weekly drop in a year .

(03:17):
The Fed has kept rates steady for five consecutive meetings earlier this year , so this would be a shift .
Driving this dovish shift from the Fed are signs of a weakening labor market .
The unemployment rate ticked up to 4.3% in August , its highest level in nearly four years .
Nonfarm payroll employment added only 22,000 jobs in August , a figure that hasn't shown much improvement since April and is below expectations .

(03:47):
Initial jobless claims also rose to 263,000 in the week ending September 6th , the highest since October 2021 .
Plus , revisions show 911,000 fewer jobs were added than initially estimated for the year through March 2025 .
On the GDP front , the US economy did expand at an annualized rate of 3.3% in the second quarter of 2025 , a nice rebound from a 0.5% contraction in Q1 .

(04:21):
However , Fitch Ratings projects a slowdown , with growth decelerating from 2.8% in 2024 to 1.6% in both 2025 and 2026 , citing weakening consumer spending and government expenditure .
So , that's the macro picture in a nutshell .
Now , let's zoom into how different parts of the market are reacting .

(04:45):
The Technology sector , despite only gaining 0.3% in August , continues to be a longterm powerhouse , especially fueled by Artificial Intelligence optimism .
Oracle , ticker ORCL , shares surged a massive 36% on September 10th after reporting a strong outlook for its cloud infrastructure business , driven by booming AI demand and a reported 300 billion cloud computing deal with OpenAI .

(05:15):
Adobe , ticker ADBE , also saw its shares rise over 4% in afterhours trading on September 11th following betterthanexpected fiscal thirdquarter earnings .
Nvidia , ticker NVDA , continues its incredible run , with shares up 3.85% in the last 24 hours and an impressive 61.96% yearoveryear .

(05:40):
Microsoft , ticker MSFT , also rose modestly after European Union regulators accepted its proposed changes to the Teams platform , resolving an antitrust investigation .
Apple , ticker AAPL , saw a slight dip after market hours today , missing a key buy point , though upcoming preorders for new iPhones and AirPods could influence its nearterm performance .

(06:07):
The Healthcare sector staged a strong rebound in August , returning 5.4% , and is currently considered deeply undervalued , trading at a 20% discount to the broader market .
Historically , healthcare has been the topperforming S&P 500 sector from September through November .
Job growth in healthcare remains robust , adding an average of 42,000 jobs monthly over the last year .

(06:34):
The sector is also undergoing transformation due to AI applications , presenting new opportunities , though potential future Medicaid cuts could introduce some financial challenges for certain organizations .
Financial Services were also up at least 5% in August .
Regulatory simplification initiatives , like those from ASIC , are aimed at reducing complexity and compliance costs , which could be beneficial .

(07:01):
Jefferies has issued