Markets Slightly Down Ahead of February PCE Data
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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 Colette O'Claire, and here is Schwab's early look at the markets for Friday, March 28th. Stocks closed slightly lower Thursday after vacillating between minor gains and losses throughout the day as traders tried to parse the impact of the latest automotive tariff news from the Trump administration. Benign gross domestic product, or GDP, and jobless claims data added little impact.

This is true for the market broadly, but not necessarily automotive stocks like General Motors, Ford, and Toyota, which slumped 7.36%, 3.88%, and 2.8% respectively. Tesla continued to counter the news and its year-to-date losses, up slightly 0.39%.

The broader market hesitancy, however, may be related to a wait-and-see approach ahead of the February Personal Consumption Expenditures, or PCE, price index data, the latest of which is released today at 8.30 a.m. Consensus estimates project that monthly prices to rise in line with the 0.3% January increase, while core prices, which exclude volatile food and energy costs, could tick up slightly to 0.4%.

While PCE data is the Fed's favored measure, it may not make as much of a market impact as normal as uncertainty about tariffs continues to dominate. Fiscal policy's dominance may keep the Fed in a state of paralysis for now.

At risk of reading too much into the Fed's March summary of economic projections, the underlying tone was not exceedingly dovish, said Kevin Gordon, director, senior investment strategist at Schwab, noting that eight Federal Open Market Committee members see zero or one cut in 2025, up from four members in December. That March data may already be slightly stale, Gordon said, with the trade situation changing daily.

Some of the market conditions we're seeing could be signs for a bounce back, Schwab's Gordon said, including washout in sentiment, potentially oversold conditions, and thrusts of breadth.

The S&P 500's 50-day moving average rolled over and closed the gap with the 200-day moving average, so the coming weeks will be crucial in determining whether the market is rejecting the notion of a bear market, Gordon said Thursday. The fact that we have only seen a correction at the index level, while the MAG-7 has already fallen by 20 percent, is a critical step so far, he said.

So a continued broad-based recovery from here, not just in terms of the index's price, but in member breadth, will bode well for the long term, as it would signal investors are not overly reliant on a handful of mega caps.

Bitcoin futures stayed around $87,000 late Thursday, up from a year-to-date low in March below $79,000. That's still far from the $110,150 high in January. GameStop gapped down a dramatic 22.11% Thursday after investors digested news that it issued debt to fund its planned purchase of Bitcoin as a Treasury Reserve asset.

That came after a similar pop when the news was announced Wednesday. The S&P 500 index fell 18.89 points or 0.33% to 5,693.31. The Dow Jones Industrial Average was down 155.09 points or 0.37% to 42,265.

299.70. Finally, the Nasdaq Composite dropped 94.98 points, or 0.53%, to 17,804.03. This has been the Schwab Market Update Podcast.

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