The Fed Pivot: AI Surges and Energy Explodes

Fresh news and strategies for traders. SPY Trader episode #1405. The market shows strong resilience following the Federal Reserve's first interest rate cut, boosting technology and AI stocks like Intel. However, geopolitical sanctions cause crude oil and the energy sector to surge. We analyze the dichotomy of rate cuts meeting sticky inflation and offer a threepronged strategy: maintaining highconviction growth (QQQ), capitalizing on tactical momentum in cyclicals (XLE, XLI), and establishing defensive fixed income and real asset positions (GLD) to hedge against persistent inflation and risk.

Episode Transcript

(00:00):
Good morning , traders !
Welcome back to Spy Trader .
I'm your host , Barry Cashflow , and it's 6 am on Friday , October 24th , 2025 , Pacific time .
We've got a lot to unpack after a highly active week dominated by earnings and a fresh Federal Reserve pivot .
The market is showing resilience , with the S&P 500 up about 0.58% and the Nasdaq leading the charge , jumping nearly 1% .

(00:27):
Let's dive into the headlines .
First up , earnings are driving huge swings .
On the positive side , the AI story continues to dominate .
Intel , ticker INTC , surged over 8% after reporting strong earnings driven specifically by AI demand .
Casino operator Las Vegas Sands , LVS , also cheered investors , soaring 12.4% on betterthanexpected revenue .

(00:54):
Industrials are also showing strength , with Dow , DOW , climbing 13% after announcing costcutting measures .
However , not everyone is celebrating .
Tesla , TSLA , missed profit estimates by 37% , though the stock surprisingly closed up 2% on subsequent trading , suggesting investors are looking past the shortterm pain .

(01:18):
Netflix and IBM also faced declines following their own disappointing reports .
Geopolitically , the energy sector is on fire .
New U.S.
sanctions on Russian oil companies have caused crude oil futures to soar , making the Energy Select Sector ETF , XLE , the daily leader , up 1.31% .

(01:40):
Now , let’s get into the analysis .
The big story , which is giving growth stocks their momentum , is the Federal Reserve .
They delivered their first interest rate cut , a 0.25% reduction , since December 2024 , signaling more cuts are possible due to a softening labor market .
Remember , the economy only added a modest 22,000 jobs in August .

(02:05):
This dovish pivot is fantastic news for growth valuations , especially in Technology , which is already the yeartodate leader , up 24.63% .
The ' AI arms race ' mentioned by the CEO of Palantir remains the dominant investment theme .

But there’s a catch (02:21):
Inflation is still sticky , expected to hold around 3.1% , well above the Fed's 2% target .
This persistent inflation is why the 10Year Treasury yield remains elevated near 4.01% .
So while the Fed is cutting rates , we have to be cautious about longduration fixed income .

(02:44):
So how do we trade this environment of resilient growth countered by sticky inflation and geopolitical catalysts ?
I have three recommendations .
First , maintain your core exposure to highconviction growth .
A lowerrate environment supports these highduration assets , and the AI demand , exemplified by Intel’s recent surge , is real .

(03:06):
I recommend maintaining exposure to the Invesco QQQ Trust , QQQ , or the Technology Select Sector Fund , XLK .
Second , capitalize on tactical momentum in cyclicals .
The geopolitical events have supercharged the energy sector , and Industrials are benefiting from positive economic expectations .

(03:29):
Tactically overweight the Energy Select Sector Fund , XLE , and the Industrial Select Sector Fund , XLI .
Look specifically at companies like APA Corp or Dow , which are showing strength .
Finally , defensive positioning is crucial .
Given sticky inflation and geopolitical risks , keep fixed income defensive .

(03:50):
Avoid excessive duration risk ; stick to broader core products like the iShares Core U.S.
Aggregate Bond ETF , AGG .
And as a hedge against both inflation and uncertainty , maintain exposure to real assets , specifically gold , via SPDR Gold Shares , GLD .

(04:10):
That’s our plan for today .
Stay disciplined , keep your eye on the data — or lack thereof , thanks to the government shutdown — and I’ll catch you next time here on Spy Trader !