Fresh news and strategies for traders. SPY Trader episode #1272. Hey there, stock market warriors and finance fanatics! Welcome back to Spy Trader, your goto podcast for cutting through the noise and getting straight to the insights. I'm your host, Market Maverick Marty, and it's 6 am on Saturday, June 28th, 2025, Pacific time. We've got a lot to unpack from a truly wild week on Wall Street, so let's dive right in! The US stock market just wrapped up a powerful 'summer rally' with major indexes hitting brand new record highs. For the week ending June 27th, the S&P 500 climbed 3.4%, breaking a twoweek losing streak and closing at a record 6,173 points. It's up 20% since April 8th! The Nasdaq Composite jumped an incredible 4.25% for the week, reaching an alltime high of 20,273 points, a remarkable 33% surge since its April lows. Even the Dow Jones Industrial Average rose a solid 3.8% to close at 43,819 points. So, what drove this monster rally? Well, a few key things. First, we saw easing geopolitical tensions, particularly regarding the IsraelIran conflict. Reports of Iran's willingness to negotiate and a ceasefire agreement helped calm investors, sending oil prices, like West Texas Intermediate crude, sliding 12.1% to $65.08 a barrel by Thursday. Second, the U.S. and China confirmed a new trade framework, which was a big sentiment booster. Although President Trump's announcement on Friday to end trade talks with Canada over a digital services tax did cause a brief dip in the S&P 500 and Nasdaq before they recovered. Third, investors are still hopeful for future interest rate cuts. Despite the Federal Reserve holding rates steady at 4.25% to 4.50% at its June meeting, policymakers still project two rate cuts later in 2025. Fed Chair Jerome Powell is cautious, but others hint at cuts as early as July or September. Looking at sectors, Communication Services led the pack, up 5.01%, with Technology close behind, rising 4.35%. AI excitement continues to fuel the tech surge. On the flip side, Energy was the weakest, down 3.19%, and Real Estate lagged, too. On the macroeconomic front, we're seeing a mixed bag. May's Consumer Price Index, or CPI, increased less than expected, but the Fed's preferred inflation gauge, PCE, inched slightly higher. The Fed even raised its 2025 PCE inflation forecast to 3.0%, citing tariffs as a contributing factor. GDP growth forecasts were downgraded by the Fed and OECD for both 2025 and 2026, suggesting a slowing economy. Employment data shows the unemployment rate steady at 4.2% in May, but many job seekers are finding fewer opportunities, pointing to a narrowing breadth of job growth. In company news, Nike shares surged 15% on Thursday after beating earnings expectations and outlining plans to handle tariff impacts. Nvidia continued its amazing run, hitting another alltime high on Wednesday, regaining its spot as the world's most valuable company. On the other hand, Intel's stock tumbled 6.3% on June 12th due to weak performance. Kroger also saw shares rise after beating profit and sales estimates. Overall, the first quarter 2025 earnings season for the S&P 500 has been strong, with 76.3% of companies beating expectations, well above the longterm average. So, why are we seeing these record highs? It's really a combination of reduced geopolitical risk, especially with the Middle East calming down. Then there's the optimism for Fed rate cuts; the market is looking past the next few months to a period of more accommodative monetary policy. Add to that strong corporate earnings, with many S&P 500 companies surprising to the upside. And, of course, the continued enthusiasm around artificial intelligence is driving the tech sector, making companies like Nvidia seem like a bastion of safety. The U.S.China trade framework also provided a positive push, even with that brief wobble from the Canada trade talks. Now, let's talk about the challenges and concerns. While inflation data was somewhat softer in May, the Fed is still worried that tariffs could push inflation higher later this year, complicating their rate cut plans. We're also seeing signs of slowing economic growth, with downgraded GDP forecasts and narrowing job growth. And despite the low unemployment rate, the 'lived experiences' of many Americans show a more challenging job market, which could impact consumer spending. So, what are the recommendations for you, the savvy Spy Trader listener? First, maintain diversification in your portfolio, but consider a tilt towards growth and technology stocks, especially those tied to AI, given their strong performance. Second, keep a very close eye on inflation data and Federal Reserve commentary. The rate cuts are anticipated, but they're not guaranteed, and any unexpected inflation jump or hawkish shift from the Fed could lead to pullbacks. Third, be prepared for trade policy volatility. That Canada situation was a clear reminder that trade policy can still cause sudden market swings, especially with the July 9th deadline for reciprocal tariffs looming. Fourth, focus on quality companies, meaning those with strong balance sheets, consistent earnings, and competitive advantages, like Nike demonstrated. Fifth, consider fixed income, particularly longerdated U.S. Treasuries and investmentgrade bonds. With the Fed eventually looking to lower rates, these could offer good value and stability. And finally, given this significant rally since April, it might be a good time to review your portfolio positioning and rebalance to ensure your asset allocation still aligns with your risk tolerance and longterm goals. That's it for this edition of Spy Trader! Remember to stay vigilant, stay informed, and keep making those smart moves. Until next time, I'm Market Maverick Marty, and happy trading!