VOO ETF At $638 With The S&P 500 At 6,966: How Jobs Data, $37.6T U.S. Debt And Trump’s $1.5T Defense Plan Hit The ETF

NYSEARCA:VOO – S&P 500 At 6,966, VOO At $638.31 And The Price Of “Nothing Changing”

Index Levels, Valuation And What $638.31 In VOO ETF Really Buys You

Vanguard S&P 500 ETF (NYSEARCA:VOO) closed at $638.31, up 0.67% on the day with a session range of $633.80–$639.40 and a 52-week range of $442.80–$639.40. The underlying S&P 500 (SP500) sits at 6,966.28, just under its 52-week high of 6,978.36 after climbing from a low near 4,835.04. SPY trades around $694.07, also near record territory. At these levels you are paying a forward multiple above 22x earnings for the index with consensus EPS growth of roughly 12–15% for 2026. That is not “cheap beta”; that is a premium valuation anchored in the view that the structural backdrop – AI, fiscal expansion, sticky labour, and consumer subscription habits – will keep nominal earnings climbing. Owning VOO ETF at $638 is effectively a leveraged call on the idea that most of what mattered in 2025 will not reverse in 2026.

Labour Market, Jobs Data And Why The Fed Won’t Cut In January But VOO Still Likes It

The December 2025 jobs report removed any serious probability of a January rate cut. Unemployment ticked down from 4.5% to 4.4%, with the earlier November estimate revised down by 0.1 percentage point. The average unemployment rate for 2025 is just under 4.3%, slightly below the latest figure but nowhere near recessionary stress. Non-farm payrolls added about 50,000 jobs in December, down roughly 11% month-on-month, and Q4 2025 saw an average loss of 22,000 jobs per month – the only quarter with net losses in the year. However, across 2025 as a whole, the economy still added about 48,700 jobs per month on average, which is roughly one-third of 2024’s pace but clearly not a collapse. Markets internalised that message fast: the futures-implied probability of a January cut collapsed from 24.4% to 4.4%, yet the S&P 500, Nasdaq 100 and Dow all traded higher as investors chose to focus on resilience, not on the missing 20 basis points. For VOO, this is a clean setup: the Fed stays at a 3.5–3.75% policy range after three cuts in 2025, growth remains positive, and earnings don’t need emergency monetary support. The ETF’s price action reflects that – trading tick-for-tick with record SP500 prints, not discounting a downturn.

A 3% World: Structural Deficits, $37.6 Trillion Debt And Why VOO Is Built For Perpetual Stimulus

The U.S. fiscal position is a core part of the VOO ETF story. At the end of 2025, U.S. national debt climbed by about $2.2 trillion to a record $37.6 trillion. Over the last year, federal expenses exceeded revenues by $458 billion, a deficit that improved by $167 billion versus the prior year but is still firmly negative. In the last 50 years there have been only 4 years of surplus, and the last one was in 2001. The Congressional Budget Office baseline assumes roughly $2 trillion of fresh debt every year for the next decade. Tariffs as a share of federal revenues have risen to about 8–9%, but that doesn’t change the core fact: there is no political appetite to genuinely tighten fiscal policy, especially with midterms in sight and with defence, AI, infrastructure and entitlement commitments locked in. A world with chronic 3%+ nominal growth, ~3% inflation and a Fed stuck in the 2.75–3.5% range is a world tailor-made for large-cap equities with pricing power and asset-light business models. VOO is filled with exactly those names. You are not buying a disinflationary, post-austerity regime; you’re buying a market riding a permanent fiscal bid.

Jobs, Demographics, Productivity And The Structural Tightness That Supports VOO Earnings

Beneath the monthly payroll noise, the U.S. labour market remains structurally tight, which is central for VOO’s long-term earnings base. Labour force growth among U.S.-born workers has been slowing across recent cycles, while the population ages and workers over 65 account for an increasing share of the workforce. Prime-age labour force participation is nearly maxed out at about 89% for men and close to 78% for women, with women’s participation rising faster. That leaves limited slack: unemployment can drift toward 4.5% without ever delivering the kind of mass layoffs usually associated with deep earnings recessions. At the same time, Q3 2025 data showed non-farm productivity up 4.9% and unit labour costs down 1.9%, meaning companies are producing more with fewer incremental wage dollars. For VOO, that is exactly the combination you want: modest cooling to keep the Fed from hiking, but enough tightness and productivity to sustain margin profiles. It also explains why companies inside VOO are cautious about cutting workers too aggressively; once you fire skilled labour in this demographic environment it is expensive and slow to re-hire, which favours automation and software over brute-force headcount.

AI Cycle, Tech Rotation And Why Concentration Risk In VOO ETF Is Still An Asset

Tech has faced a relative rotation but not a structural break. The sector represents roughly 35% of the S&P 500’s weight, while the so-called “Magnificent Seven” still account for more than 31% of the index’s market capitalisation. Despite that, the main tech ETF still shows a pattern of higher lows and higher highs on the weekly chart, signalling an intact uptrend. Insider buy/sell ratios in both tech and the Nasdaq universe show insiders accumulating on this consolidation rather than exiting; they are deploying capital into their own stocks at these levels. Tech as a sector screens at about 10% undervalued versus fair value according to broad valuation work, while NVIDIA – the central pick-and-shovel name in AI – trades at a forward multiple just above 26x, essentially in line with a tech median of 25.6x, despite consensus expectations for >$200 billion of free cash flow by FY2028 and margins moving toward 50%. That is not the profile of a dying bubble; that is a sector in a mid-cycle digestion before the next leg. Because VOO ETF is market-cap weighted, you’re heavily exposed to this AI-infrastructure build-out. If the multi-trillion AI capex wave continues and enterprises move from experiments to deployment, the concentration that many worry about becomes a structural advantage.

Sticky Subscriptions, Consumer Behaviour And The Recurring Revenue Engine Inside VOO

One of the most underappreciated supports for VOO ETF is how “non-discretionary” some of its biggest consumer and tech holdings have become. Roughly 50% of customers who cancel Netflix are back within six months. Amazon Prime renewal rates sit above 90%, and Costco membership renewal is similarly high. The iPhone and Apple’s services bundle act as a subscription-like ecosystem where users are reluctant to exit, particularly in higher-income cohorts. At the macro level, personal savings are only about 30% above 2016 levels while cumulative inflation over that period is above 35%, yet consumer spending remains robust; households are clearly prioritising small-ticket digital and retail subscriptions over rebuilding savings. Boston Fed data show a “K-shaped” situation: higher-income consumers entered the post-pandemic period with lower credit card debt than in 2019 and still have room to spend, while low- and middle-income groups carry more debt. For VOO, the key point is that a large portion of cash flow from top holdings is coming from services and memberships that consumers treat as mandatory. That kind of stickiness supports high-multiple valuations and lowers the risk that a mild slowdown destroys earnings.

Buybacks Above $1 Trillion, 1.79% Buyback Yield And How VOO ETF Rides The Corporate Bid

Share repurchases are another structural pillar underneath VOO ETF. Trailing twelve-month S&P 500 buybacks have surpassed the $1 trillion threshold again, delivering an implied 1.79% buyback yield on top of the dividend yield. Aggregate buyback spending is up roughly 11.1% year-on-year, and almost exactly 49.5% of Q3 2025 repurchases came from the top 20 market-cap names – the same mega-caps that dominate VOO’s holdings. Information Technology and Financials are the leading buyback sectors. That means investors in VOO are not just collecting the index’s ~1% cash yield via SPY’s $7.28 annual dividend; they are also effectively receiving a stealth yield in the form of reduced share counts and boosted EPS. Combine a 12–15% EPS growth outlook with a 1.79% annual shrink in share count and you have mid-teens per-share earnings growth potential even before any valuation re-rating. It explains why valuation has been able to hold above 22x forward: management teams are using their cash hoards to support share prices aggressively.