ECB and Netflix Awaited After Tariff-Related Spill
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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, April 17th. First, an important note. U.S. markets are closed Friday, April 18th in observance of Good Friday. The Schwab Market Update podcast will return on Monday, April 21st.

It's a busy day to close out a short week with markets shut tomorrow for the Good Friday holiday. Earnings from Taiwan Semiconductor Manufacturing, Netflix and UnitedHealth, a rate decision by the European Central Bank and U.S. housing data are some of the highlights. Investors could also have their eyes on trade after reports in the media of progress between Japan and the U.S. and that China may be open to start talking.

The ECB is widely expected to trim rates by 25 basis points. We are likely to get a cut from the ECB, but may also hear about they are monitoring the situation and will act appropriately, which likely means another cut in June to 2% on the target rate as inflation remains tame and the risks to growth are on the downside, said Jeffrey Kleintop, chief global investment strategist at Schwab. The Bank of Canada held rates steady yesterday.

U.S. Treasury markets close early today at 2 p.m. ET ahead of the holiday. Stocks observe normal trading hours. Tech stocks are back in focus today after Nvidia sank almost 7% Wednesday, weighing on the entire market. The losses came after it announced a $5.5 billion charge reflecting the Trump administration's new requirement to obtain a special license before exporting the firm's H20 AI chips to China.

The product was designed to accommodate tight U.S. export controls, but the White House is concerned it could be used to help China build a supercomputer. Advanced Micro Devices, another chip firm, also took a charge of approximately $800 million related to the requirement.

This means a tougher road ahead for a chip sector already struggling with China's retaliatory tariffs and pressure from the Trump administration to bring some manufacturing home, a costly endeavor. NVIDIA outlined plans to do exactly that on Tuesday, temporarily boosting shares before it announced the charge that analysts think could reduce earnings growth potential.

The news accompanied additional pain as chip equipment maker ASML reported lower than expected quarterly orders early Wednesday. The recent tariff announcements have increased uncertainty in the macro environment and the situation will remain dynamic for a while, ASML CEO Christophe Fouquet said in a statement.

However, the firm stood by its 2025 and 2026 full-year guidance and said conversations with customers so far back its views that those will be growth years. The tech sector dropped anchor yesterday, losing nearly 4 percent thanks to semiconductor weakness. Consumer discretionary and communications services also fell 2 percent or more, but energy finished in the green amid more tension with Iran.

Also hurting stocks yesterday was an unpleasant outlook from Federal Reserve Chairman Jerome Powell, who warned of possible inflation related to tariffs and referred to slower first quarter growth. Aside from tech, focus remains on the Treasury market after a slight rally yesterday pushed the benchmark 10-year Treasury note yield below 4.3 percent, down 30 basis points from last week's highs.

Selling in treasuries and the dollar last week led to concerns about investor faith in U.S. assets amid trade policy turbulence. The dollar remained near three-year lows yesterday, but a drop in both the dollar and treasuries might have been more worrisome. Data today include initial jobless claims, which will likely get a close look for signs of trade instability turning into layoffs. Analysts expect a relatively low $225,000, according to Briefing.com.

Other reports to watch include March housing starts and building permits due before the open. Consensus is for a slight drop in permits from February and a sharp drop in starts, according to Briefing.com. Consensus is for seasonally adjusted housing starts at an annual rate of $1.418 million and permits of $1.455 million.

The tech washout and Powell's comments drowned Wednesday's upbeat March U.S. retail sales report, which came in above expectations, up 1.4 percent monthly. Analysts had expected a 1.3 percent rise. With autos excluded, the increase was 0.5 percent, which still beat the 0.2 percent Briefing.com consensus. Earnings pick up next week with a long list of key companies, including Tesla and Alphabet.

Netflix reports this afternoon, after the Wall Street Journal reported this week, that the streaming giant looks to reach a $1 trillion market capitalization and double revenue by 2030. The monthly price of a subscription is now $17.99, up from $7.99 in 2011.

The company is no longer reporting quarterly subscriber count gains, taking some starch out of today's report. Instead, investors may watch for progress in its attempt to bring more advertising to its lower-tier ad-supported service. Technically, there's a wide range for the S&P 500 index between last week's 13-month low near 4,835 and the mid-March low near 5,500.

The near-term trajectory of the S&P 500 likely depends on any announced trade deals, but in the absence of any announcements, a retest of last Monday's lows wouldn't be uncommon, historically speaking, said Nathan Peterson, Director of Derivatives Analysis at the Schwab Center for Financial Research.

The Dow Jones Industrial Average fell 699.57 points Wednesday or 1.73% to 39,669.39. The S&P 500 dropped 120.93 points or 2.24% to 5,275.70 and the Nasdaq Composite sank 516.01 points or 3.07%.

to 16,307.16. This has been the Schwab Market Update podcast. To stay informed, visit www.schwab.com slash market update or follow us for free in your favorite podcasting app. And if you like what you've heard, please consider leaving us a rating or a review. It really helps new listeners find the show. Join us for another update tomorrow.

For important disclosures, see the show notes and schwab.com slash market update podcast.