Jobless Claims, Broadcom Awaited After Rebound
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Welcome to the Schwab Market Update podcast, where we prepare you for each trading day with a recap of recent news and a look at what's ahead. I'm Keith Lansford, and here is Schwab's early look at the markets for Thursday, March 6th. After yesterday's trade-related rebound, today features results from Broadcom and Costco, among others.

On the data watch, this morning's weekly initial jobless claims report might draw more attention than usual following a surprise 22,000 surge to 242,000 last time out, the highest since early December. Consensus is 234,000 according to briefing.com.

Today's fourth quarter unit labor costs data also could offer job market insight after climbing 3% in the government's first estimate. Analysts expect no change to the preliminary data. Another jobs-related metric today is the monthly Challenger Job Cuts report. Government layoffs might not register yet, but many large firms announced job cuts in February. This report is closely watched for changes in tech sector employment.

But the week's highlight comes tomorrow with the February non-farm payrolls report. Analysts expect U.S. jobs growth of around 159,000, with unemployment holding steady at 4%. Wednesday's February ADP employment change of 77,000 was well below the 143,000 briefing.com consensus, but those private sector numbers don't often correlate with the official government reading.

Still, ADP's comments about the jobs market and hiring climate seem to bode ill for Friday. Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month, ADP said.

ISM Services PMI on Wednesday came as a relief to investors wary of tepid economic data and might have contributed to yesterday's rally. The headline of 53.5 slightly edged above consensus of 53.0 above the 50 needed for expansion and up from 52.8 last time.

Commerce Secretary Howard Lutnick said Tuesday the U.S. might be able to work something out with its trading partners on tariffs. The Trump administration then postponed tariffs on automakers Wednesday for another month, but uncertainty around trade policy probably isn't going away anytime soon.

This afternoon features results from the semiconductor giant Broadcom, shares of which are now underwater along with most of the chip sector for 2025. Broadcom's last earnings report sent shares much higher on solid revenue growth driven by AI chips. Analysts expect earnings per share of $1.49 up sharply from a year ago.

Executives may be asked about recent media reports that Broadcom and NVIDIA had been testing Intel's manufacturing process as part of an effort to bring more production back into the U.S. Results are also due from Costco, Macy's, Kroger, and Gap. Earnings from Gap follow a disappointing outlook from Abercrombie & Fitch that sank shares of that retailer Wednesday. Gap shares fell sharply Wednesday.

Though retail had its struggles, automaker shares revved up Wednesday on the tariff delay, led by 7% gains for General Motors and 6% for Ford. Struggling shares of Tesla, however, rose less than 1.5% after sales fell 76% in Germany last month.

Auto stocks got a big bump, but it could be temporary, said Jeffrey Kleintop, chief global investment strategist at Schwab. Importantly, the biggest exporters from Mexico and Canada to the U.S. are U.S.-headquartered manufacturing businesses Ford and GM, not foreign businesses.

Not surprisingly, automakers pushed back on the Trump administration and got another one-month delay on the 25% tariff announced today. So a desire to make good on his tariff threats may be balanced by Trump's desire to have a legacy of restoring U.S. manufacturing.

The beaten-down semiconductors sector got a reprieve Wednesday with a PHLX semiconductor index up 2%. It's still down sharply for the year on tariff and deep-sea concerns. But the tech-heavy Nasdaq composite clawed back above its 200-day moving average amid mega-cap strength. Moderna jumped double digits after reports of insider stock purchases.

Technically, support appeared to show up for the S&P 500 index just above the 200-day moving average Wednesday for the second straight day, as the S&P 500 bottomed just above 5,740. The 200-day is just below 5,730.

The 10-year Treasury note yield quickly gained by late Wednesday, climbing back above 4.25% after falling to its lowest level since October on Tuesday, below 4.15% on economic growth worries.

Yields have whipsawed the past few days given the uncertainty, said Colin Martin, director of fixed income strategy at the Schwab Center for Financial Research. With growth concerns front and center, rate cuts later this year still seem likely as the Fed funds future market is now pricing in three cuts by year end. We still believe the Fed will be on hold for the next few meetings with a rate cut likely coming later this year.

Sector-wise, materials and industrials led the way Wednesday, with mining stocks catching a ride on rising copper and gold prices. Copper rose more than 5 percent as Trump signaled a 25 percent tariff on imports, Bloomberg reported. Energy stocks brought up the rear as crude oil had another tough day, at one point setting a nearly two-year intraday low just above $65 a barrel.

Oil prices are weak on worries about U.S. demand if the economy retreats. As of late Wednesday, the CME FedWatch tool put rate pause odds at 93% for the March Federal Open Market Committee meeting, but chances of a rate cut by the May meeting are around 40% and nearly 80% for the June meeting. Fed Chairman Jerome Powell is scheduled to deliver remarks on the economy Friday.

The S&P 500 index added 64.48 points Wednesday, or 1.12%, to 5,842.63. The Dow Jones Industrial Average climbed 485.60 points, or 1.14%, to 43,006.59. And the Nasdaq Composite rose 267.57 points, or 1.46%, to 18,552.73.

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