Episode 29: Building Wealth Podcast with Steven Sitkowski (Interest Rates, AI, Oil, and Options Risk)
Interest Rates, AI, and Managing Market Risk
Markets are facing several headwinds at once.
In Episode 29 of the Building Wealth Podcast, Steven Sitkowski examines how rising oil prices, inflation, interest rates, geopolitical uncertainty, and changing investor sentiment are affecting the stock market—and why understanding risk becomes especially important during periods like this.
What's Moving the Stock Market?
One of the biggest concerns is interest rates.
Steven discusses the 10-Year Treasury yield, which temporarily crossed 5%. He explains that higher yields can create pressure on stocks while also increasing borrowing costs throughout the economy.
Oil is another important factor. At the time of recording, oil was around $102 per barrel, significantly higher than before the Middle East conflict discussed in the episode. Higher energy costs can contribute to inflation and put additional pressure on consumers.
That makes the Federal Reserve's next decision particularly important.
With inflation above the Fed's target, Steven discusses expectations for higher interest rates and why investors should pay attention not only to the rate decision itself, but also to what the Fed says about inflation and the economy going forward.
Is the Stock Market Turning Bearish?
Recent market data has become less encouraging.
Steven reviews market breadth and points out that declining stocks significantly outnumbered advancing stocks during the previous week. New 52-week lows also outnumbered new highs, while nine of the market's 11 sectors finished lower.
Investor sentiment has weakened as well, with the Fear & Greed Index moving deeper into fear territory.
But Steven emphasizes the importance of perspective.
Despite these concerns, the market was still up more than 11% year to date at the time of recording, while technology had gained nearly 22%.
From a technical perspective, the S&P 500 was also still slightly above its rising 50-day moving average. That suggests the longer-term trend had not completely broken despite the recent weakness.
Why Technology Remains Important
Technology continues to be one of the strongest areas of the market.
Steven challenges concerns that strong AI-related performance automatically means technology stocks are excessively expensive. Based on the valuation data discussed in the episode, technology was trading below its historical average P/E multiples.
Combined with strong earnings and continued AI investment, Steven believes technology remains an important area for investors to watch.
Understand Your Options Trades Before Risking Money
Episode 29 concludes with an important lesson about options trading.
A viewer asked Steven about an Apple spread trade that didn't perform as expected, even though the stock moved in the anticipated direction.
Steven uses the question to reinforce a simple rule: don't put money into a trade you don't fully understand.
Before entering an options spread, traders should understand the potential risk and reward, how the position works, and what they plan to do if the stock moves either for or against them.
The lesson applies beyond options. Understanding an investment before risking capital is an essential part of becoming a more disciplined investor.
Key Takeaways from Episode 29
Rising oil prices and inflation continue to create market uncertainty.
The Federal Reserve and interest rates remain major market catalysts.
Market breadth and investor sentiment have recently weakened.
The broader market remains positive for the year despite recent volatility.
Technology continues to outperform many other sectors.
AI and strong earnings remain important long-term market themes.
Investors should understand the risks and mechanics of any options strategy before trading.
Episode 29 of the Building Wealth Podcast with Steven Sitkowski shows why periods of uncertainty make education and discipline especially important.
Markets will always face changing conditions. Rather than reacting to every headline, understanding the bigger picture—and knowing the risks you're taking—can help investors make more informed decisions.
FAQs
Why are rising interest rates important for the stock market?
Higher interest rates can increase borrowing costs and put pressure on stock valuations. In Episode 29, Steven Sitkowski discusses the 10-Year Treasury yield and why investors are closely watching the Federal Reserve's next interest rate decisions.
How do higher oil prices affect the stock market?
Higher oil prices can contribute to inflation, increase costs for consumers and businesses, and influence Federal Reserve policy. Steven identifies oil as one of the major sources of market uncertainty discussed in Episode 29.
Is the stock market becoming bearish?
Steven points to weaker market breadth, more 52-week lows, and declining investor sentiment as signs of short-term weakness. However, the broader market remained positive for the year and slightly above its rising 50-day moving average at the time of recording.
Why does Steven Sitkowski remain interested in technology stocks?
Technology continued to outperform the broader market, supported by strong earnings and AI-related growth. Steven also notes that technology valuations were below certain historical P/E averages presented in the episode.
What should investors understand before trading options spreads?
Steven emphasizes that traders should understand how an options spread works, its potential risk and reward, and what they plan to do if the trade moves for or against them before putting real money at risk.
What is the Building Wealth Podcast with Steven Sitkowski about?
The Building Wealth Podcast with Steven Sitkowski helps investors better understand the stock market, investing, wealth building, options trading, and economic trends. Drawing on more than four decades of experience in the financial industry, Steven Sitkowski shares practical market insights, investment education, and strategies designed to help individuals make more informed financial decisions.
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