After Relief Rally, Market Still Faces Oil, War

0:05Welcome 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.

0:17I'm Keith Lansford, and here is Schwab's early look at the markets for Wednesday, April 1st. The new month begins with double-barrel focus on the war and the U.S. jobs picture after major indexes enjoyed their best session of the year Tuesday. The rally wrapped up a disappointing month that saw the broad market descend 5%. How much the rally reflected hopes for progress in Middle East de-escalation and how much was end-of-quarter short covering might be debated. If most of the move was technical, another turn lower can't be ruled out. Conflict continued to rage late Tuesday, despite hopeful talk that Pakistan and China could potentially bring the warring parties together.

1:03Crude appeared hesitant to surrender recent gains. It was still above$100 a barrel late Tuesday. Today brings a look at March growth in private payrolls from ADP, an appetizer for Friday's government non-farm payrolls data. Retail sales for February is another report that might attract some attention this morning, though it's a bit dated. Consensus for monthly retail sales growth is 0.5 percent, according to Briefing.com, which would be a nice improvement from negative 0.2 percent in January when cold weather across much of the country hurts shopping interest. In data yesterday, February job openings came in at 6.88 million in the Job Openings and Labor Turnover Survey, or JOLTS, report.

1:52Analysts had expected headline openings just below 6.9 million, down from January's upwardly revised 7.2 million. The quits rate, which provides a sense of how confident people were to leave their jobs and look for new ones, was 1.9 percent in February, and total quits fell to 2.97 million. That was below the forecast of 3 million. The report's hiring rate fell to lows last seen in April of 2020. Generally, the report looked bearish for jobs. It also sent a negative message about construction, as the construction industry hiring rate fell to an all-time low for February. Consumer Confidence, a report that reflected sentiment in the first month of the war, was better than expected Tuesday, but remained low.

2:39Analysts had expected it to drop to a headline of 88 % from an already weak 91.2 % in February. The actual headline was 91.8%. For today's ADP report, due before the open, analysts expect a rise of 42 ,000, down from 63 ,000 the prior month. Looking ahead to Friday's more influential non-farm payrolls, analysts look for slightly more than 50 ,000 jobs added, which would be a marked improvement from the 92 ,000 lost in February. Equity markets are closed for Good Friday, meaning only the bond market will initially trade the jobs data, and bond trading closes early on Friday. That makes weekend futures trading important to track, heading into Monday's Open for a sense of how participants respond to the numbers.

3:29The Federal Reserve closely watches all the jobs data and retail sales this week. Chairman Jerome Powell said earlier this week that inflation expectations, a key metric, remain in check, but prolonged higher oil prices are a threat. The market plugs in growing chances of at least one Fed rate cut this year, with the latest odds near 30%, according to the CME FedWatch tool. That's up from zero at one point last week, when war-fueled inflation concerns briefly tipped the market into pricing and possible rate hikes. Rates have been on pause since December at 3.5 percent to 3.75 percent, and Powell said the central bank is in a good position to adjust either lower to aid employment or higher to clamp down inflation.

4:14One concern that could keep trading cautious is growing fear of another dramatic decline in payrolls. Two straight negative readings, especially if March is weak as oil prices jumped, might suggest that recent recession warnings from some analysts have more credence. Crude oil continues to set the pace, despite Tuesday's hopes for de-escalation. Thousands of U.S. troops are in the region, and media reports late Tuesday said another U.S. aircraft carrier is on its way. Iran threatened new U.S. targets in the region, but even if the war ended soon, repairs would likely take some time, and crude oil and natural gas production can't be turned on again like a sink.

4:57Also, many countries just now are receiving their final shipments of oil that left the Middle East before the war and face the prospect of fewer shipments to replenish stocks. Any long-term gaps could hurt global economic growth with an impact on U.S. companies that export. There's no guarantee Tuesday's better market vibes will last. It's unclear what conditions the warring parties would insist on to stop the violence. A single headline could change sentiment. Treasury yields eased slightly on Tuesday and continued to retreat from a brush with 4.5 % for the 10-year note yield late last week. That rally took the yield up more than 50 basis points from its early March low below 4%, a rapid ascent for a market that had been relatively range-bound much of late 2025 and early 2026.

5:52Last year, a spike in Treasury yields appeared to affect White House tariff policy, which got dialed back. Checking the technical picture, longer-term support remains near 6 ,175 for the S &P 500 index. Wednesday could be about defending former resistance at 6 ,500 now that it's been achieved, while any follow-through will be measured by how quickly and sustainably it approaches and takes out the 200-day moving average now near 6 ,638. Below that, a level to watch is 6 ,538. Nike reported quarterly results late yesterday and saw shares initially flatten after earnings beat Wall Street's consensus.

6:38Revenue growth was 0.1 % year-over-year in line with expectations. China sales fell again. In other corporate news Tuesday, Berkshire Hathaway's chairman and former CEO Warren Buffett said he will deploy cash if there is another big drop in the market and that Berkshire is buying U.S. Treasuries. Major Wall Street indexes had their best day in nearly a year Tuesday on hopes that peace might be closer. The tech-focused Nasdaq Composite led all indexes with a 3.83 % rise, followed by a 3.5 % gain for the rate-sensitive Russell 2000 small-cap index. The broader market climbed nearly 3 % and finished near its highs, a positive sign technically that could indicate more buying interest as today's session starts.

7:28Yesterday saw a broad rally as 8 of 11 S &P sectors finished higher. The only laggards in the red were energy, hurt by ideas oil might drop, and traditionally defensive areas like staples and utilities. The sector's hardest hit over the last month, including communication services and infotech, both rose more than 4%. percent. An individual trading Tuesday, Marvell Technology climbed 12 percent as NVIDIA announced a two billion dollar investment in the semiconductor firm, CNBC reported. The partnership builds on NVIDIA's technology allowing customers to develop semi-custom AI infrastructure, NVIDIA said in a press release.

8:11The chip sector had its best day in a while as the PHLX Semiconductor Index rose more than 6%. Leading chip-connected performers up 6 % or more included SanDisk, CoreWeave, Arm Holdings, Super Microcomputer, and Taiwan Semiconductor Manufacturing. Magnificent Seven stocks performed well yesterday, as many investors appeared to re-embrace risk in growth shares. Meta platforms led the way with 6 % gains after TechCrunch reported Meta is testing a premium Instagram subscription tier. Alphabet rose 5 percent and NVIDIA climbed more than 5.6 percent. Mining stocks rose as metals prices improved on hopes for an end to the conflict and less pressure on global economies.

9:00Airline stocks soared after the government said transportation secured administration workers and lines at airports diminished. United Airlines rose 8 percent. McCormick dropped 6 percent after an announcement that the company had entered into an agreement to combine with Unilever's foods business. Apellas Pharmaceuticals soared 135 percent on news that Biogen has agreed to buy all outstanding shares for 5.6 billion dollars. Biogen said the purchase will enhance its growth portfolio in immunology and rare disease. Shares of Biogen fell 2%. And Constellation Energy fell 6 % as investors reacted negatively to its guidance, which was in line with expectations.

9:52The Dow Jones Industrial Average climbed 1 ,125.37 points Tuesday, or 2.49%, to 46 ,341.51. The S &P 500 index added 184.80 points, or 2.91%, to 6 ,528.52. And the NASDAQ composite finished up 795.99 points, or 3.83%, to 21 ,590.63. 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.

10:53For important disclosures, see the show notes and schwab.com slash market update podcast.