Jobs, Starbucks, GM Next with SPX Streak at Five
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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 Tuesday, April 29th. The week started quietly in terms of data and earnings, but it's the calm before the storm. Investors brace for around 175 earnings reports the next four days, including four mega caps.

Even the coming weekend is busy, featuring earnings Saturday from Berkshire Hathaway, another $1 trillion company. March job openings today and April layoffs Thursday are two key data points leading up to Friday's non-farm payrolls report, which may be the first to show any impact from tariff-related concerns in the corporate world. Government job cuts also could show up in the data.

Tariff uncertainty could lead to a weaker labor market later this year, so a weak report this early could have negative ramifications for the overall economy, said Colin Martin, director of fixed income strategy at the Schwab Center for Financial Research. Job openings in March will reflect the climate before President Trump's April 2nd tariff announcement, but there was plenty of trade-related market turbulence in March, too. This might have kept firms reluctant to put out as many job ads.

The headline jolts was 7.568 million in February, and analysts expect the March number to drop slightly to 7.5 million. Another item today that could provide insight into labor conditions is April consumer confidence from the Conference Board. Sentiment data last week was gloomy, and analysts expect a weak confidence headline of 88.3 down from 92.9 in March.

If those surveyed were concerned about losing their jobs, it might show up in the data. So could worries about inflation. Coca-Cola, Pfizer, Honeywell and General Motors report this morning and Starbucks and Visa open their books after the close. The earnings calendar gets even heavier Wednesday afternoon when Microsoft and Meta Platforms report, followed by Apple and Amazon late Thursday.

Early tidings from consumer-facing firms like PepsiCo, Domino's Pizza, Chipotle, and various airlines have encountered worries that consumers may be prepping for a possible recession. GM could be worth watching, with car companies in the eye of the tariff storm.

MegaCap earnings could hint how firms like Apple and Amazon plan to handle massive tariffs on goods from China. Another thing to check is if cloud leaders like Microsoft and Amazon continue to see strong demand after an upbeat earnings report from their competitor Alphabet last week. Alphabet also reported solid digital ad demand, something meta investors likely hope to see.

Semiconductor investors will watch tech earnings to glean whether mega caps continued their heavy spending on AI chips. The Federal Reserve is now in its quiet period with no speakers ahead of next week's meeting. Futures trading reveals less than a 10% chance of a May rate cut after numerous Fed policymakers made clear they're not ready to adjust rates with possible inflation from tariffs still unclear.

Odds of a June rate cut were 63 percent late Monday, according to the CME FedWatch tool. Although the door for a cut at the June meeting is open, we still expect the next cut to come sometime in the second half of the year, Schwab's Martin said. The Fed funds futures market continues to price in three or four cuts by year, and that seems too aggressive for us unless the labor market significantly deteriorates.

Stay tuned for Chinese monthly manufacturing data tonight, U.S. time. Analysts expect some metrics to fall into contraction below 50, though Chinese officials early this week said they stand by their earlier gross domestic product predictions despite the tariff war.

Speaking of GDP, the government's first look at U.S. first quarter GDP looms tomorrow morning. Analysts expect a light reading with an annual rate of 0.4 percent down from 2.4 percent in the fourth quarter. The report has inflation elements too, including the GDP price deflator and the PCE price index, both of which will be closely watched.

GDP is quite dated, as the first quarter ended a month ago. Still, a negative GDP reading, if that's the case, would likely spook the markets, Schwab's Martin said. Tomorrow also brings the March Personal Consumption Expenditures, or PCE, price index, an inflation metric closely watched by the Fed.

In data Monday, the April Dallas Fed Manufacturing Index fell sharply to its lowest level since May of 2020. This followed other soft regional manufacturing data out last week. Treasuries found buyers yesterday up and down the curve amid worries that key data this week could come in light.

The benchmark 10-year note yield, which moves the opposite direction of Treasury's, fell five basis points to just over 4.21 percent, the lowest since April 8th and down sharply from the monthly peak near 4.6 percent. It's back below its 50-day average near 4.3 percent.

Late Monday, the Treasury Department said it expects to borrow $514 billion in privately held net marketable debt for the April through June and the July through September quarters. This looked bearish for Treasuries as that amount was far higher than the Treasury Department announced back in February.

The S&P 500 managed its fifth straight higher close, though just by a nose yesterday, despite pressure from many of the mega caps ahead of earnings that hurt the Nasdaq composite. Nvidia, Alphabet, Amazon and Microsoft all racked up losses, though Apple managed to stay green and Tesla revived. The pressure could reflect anxiety over last quarter's magnificent seven results and guidance for the most part didn't impress Wall Street.

NVIDIA shares got hurt Monday by news that China's Huawei is getting ready to test a new AI processor, Bloomberg reported. The tech sector approaches this critical earnings week down 14 percent from all-time highs, but up 21 percent from lows posted earlier this month. Yesterday's late comeback was led by energy as well as a mix of cyclical and defensive sectors, including real estate, utilities and industrials.

The Dow Jones Industrial Average climbed 114.09 points Monday, or 0.28%, to 40,227.59. The S&P 500 Index added 3.54 points, or 0.06%, to 5,528.75. And the Nasdaq Composite fell 16.81 points, or 0.10%, to 17,366.13.

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