America's hot-hot-hot third-quarter economic growth is hammering Federal Reserve rate cut bets and raising big questions over the costs of President Donald Trump's economic strategy, creating a conundrum for investors.

U.S. gross-domestic product grew at a 4.3% clip over the three months ending in September, faster than the 3.8% pace recorded over the second quarter, and well ahead of Wall Street's 3.3% forecast.

President Trump is claiming that his tariff strategy is responsible for the surprise advance, but a big chunk of the overall gain was tied to health care services and consumer spending. The vagaries of trade figures added around 1.6 percentage points to the overall tally.

"That partly is due to the very limited retaliation to the tariffs from most trade partners, although the scale of the net trade boost to growth in Q3 is unlikely to be sustained," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.

Still, with consumer spending jumping by 3.5%, more than double the 1.6% average over the six months ending in June, and the total of fixed investment and consumption growing by around 3%, the economy is on solid footing.

But that comes at a cost. A broad measure of inflation, the GDP deflator, accelerated at a 3.8% clip, well ahead of Wall Street's 2.7% forecast.

That bodes poorly for the Fed's attempts to keep inflation in check, and adds a new dimension of skepticism to last week's CPI reading for the month of November that showed a surprise pullback in both core and headline pressures.

"If the economy keeps producing at this level, then there isn't as much need to worry about a slowing economy and concerns may actually flip back to the price-stability constraint," said Chris Zaccarelli, CIO at Northlight Asset Management.

The CME Group's FedWatch is already starting to reflect that view, with the odds of a January rate cut falling to just 13%.

The Fed's next move lower, in fact, may not come until June, when the central bank will be under new leadership following the end of Chairman Jerome Powell's term in May.

That change in tone could start to impact stock performance heading into the new year, as sectors traditionally supported by lower interest rates underperform those more tightly correlated to domestic economic growth. The Republican-led One Big Beautiful Bill Act is also expected to provide a tailwind to more cyclically-focused stocks.

Healthcare has been Wall Street's top-performing sector over the past three months, rising nearly 14%, with industrials, financials and materials all posting solid gains of between 2.6% and 1%. Information technology, the benchmark of the tech trade, has gained around 2.7%.

Lori Calvasina, head of U.S. equity strategy research at RBC Capital Markets, likes healthcare, financials and materials heading as "overweighted" sectors into next year.

"Financials is seen as having one of the most constructive policy backdrops in our analyst survey and tends to outperform when consumer sentiment rises," she said in a recent client note.

In healthcare, "earnings and revenue revisions remain quite strong for the sector relative to others with the S&P 500," Calvasina said. "Valuations continue to look compelling relative to the broader market and are still quite reasonable in absolute terms relative to their own history."

A "run it hot" economic strategy is also likely to continue to weigh on the U.S. dollar, which is having its worst year in terms of foreign exchange performance since the late 1970s. A weaker dollar tends to support export-focused stocks, but adds to import costs and erodes profit margins.

Precious and industrial metals prices are likely to build on this year's gains if the dollar continues to weaken, particularly if investors remain concerned that inflation risks will go unchecked by a new Fed regime.

Copper, a key component in the AI buildout, hit a fresh all-time high earlier Tuesday and topped the $12,000 a ton mark for the first time on record. Gold prices, meanwhile, have risen nearly 70% so far this year, with silver surging by nearly 140%.

Trevor Yates, senior investment analyst at Global X ETFs, thinks the market is in the "early innings of a broader precious metals rally".

"Our constructive view on gold also keeps us bullish on gold miners, which have historically delivered greater leverage to rising gold prices and still offer compelling valuations even if the current gold price only proves sustainable," he said.

" Silver continues to price in the more favorable macro outlook, with lower interest rates and the potential for a weaker U.S. dollar boosting the appeal for hard assets," he added.

A further play in the "run it hot" scenario might be found in small and mid-cap stocks, according to Jason Pride and Michael Reynolds, investment strategists at Glenmede.

"There is relative upside to both valuations and earnings for small caps vs. larger peers," the pair wrote earlier this week. "Small cap companies are likely to benefit more from corporate tax relief and lower interest rates while also being less exposed to the impact of tariffs."

In the meantime, enjoy the heat.