After Worst Week of Year, War and Oil Center Stage

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. I'm Keith Lansford, and here is Schwab's early look at the markets for Monday, March 30th. A shortened trading week kicks off with investors facing jobs data that could compete with war and oil for attention. This follows the fifth straight losing week for Wall Street, the longest stretch since May of 2022. As of publication time late Friday, war continued to rage in the Middle East with little hope of de-escalation, and investors seemed worried about possible U.S.

0:47ground operations. Meanwhile, media reports said Secretary of State Marco Rubio told allies the Iran war will last another two to four weeks. Data this week builds toward the March non-farm payrolls report due at 8.30 a.m. Eastern time Friday. Along the way, investors receive the the February Job Openings and Labor Turnover Survey, or JOLTS, tomorrow, ADP employment on Wednesday, and Challenger job cuts data Thursday. All these numbers could receive heightened scrutiny after February's jobs report showed a drop of 92 ,000. Heading into the week, analysts on average expect a slight comeback in March to growth of around 50 ,000.

1:30Friday is an odd day with the markets close for Good Friday holiday on the same day the jobs report comes out. That means investors won't have a chance to trade the numbers until futures trading begins over the weekend. Fed speakers are ahead, including Chairman Jerome Powell at 10.30 a.m. Eastern Time today when he participates in a moderated discussion at the Harvard University Principles of Economics class. It's unclear if he'll address any monetary policy issues. Fed Governor Michael S. Barr speaks tomorrow on stablecoins, and minutes from the last Fed meeting are due next week. Crude oil continues to set the pace, with the Strait of Hormuz virtually closed.

2:17Hopes rose that crude supply blockages would ease last week when Iran allowed a few vessels through the strait, and any sign of a loosening of barriers to ship movement there would likely rekindle some positivity in the markets. But on Friday, international benchmark Brent crude prices rose 4.2 percent to over$112 per barrel, while North American benchmark WTI crude oil prices jumped 5.5 percent to roughly$100 per barrel. Though the U.S. gets most of its oil from domestic and other North American sources, its oil prices also reflect the global benchmarks to some extent. As a result, gasoline prices neared$4 a gallon across the U.S.

3:01heading into the weekend. This has analysts concerned about the possible impact on long-run consumer spending and sentiment. We think that there are some potential negative consequences to the economy the longer this goes on, and as we see oil prices and gas prices stay elevated, said Colin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research. There are concerns that another few weeks of ore will cause many economies to run out of their spare supplies of oil and possibly ration, according to CNBC. This could hurt economic growth, especially if it forces workers to stay home.

3:40Investors were also spooked by news early Friday that China's Commerce Ministry initiated two probes into U.S. trade practices that have slowed the flow of Chinese goods to the U.S. The move threatens a tenuous trade truce between the two nations, raising the specter of a renewed, full-blown trade war. In Data Friday, the March University of Michigan Consumer Sentiment Report slid to a three-month low of 53.3 as the Iran war fueled inflation fears. The initial report pegged headline sentiment at 55.5. Five-year inflation expectations also climbed to 3.8%, compared with the preliminary reports 3.2%.

4:25As of late Friday, odds of rates ending the year below the current target range of 3.5 % to 3.75 % were zero, according to the CME FedWatch tool. Chances of at least one hike this year were around 24%, though odds of a hike at next month's Fed meeting are just 4%. This is another quiet earnings week. Other than expected results from consumer bellwether Nike tomorrow afternoon, Nike's shares have been under pressure from tariffs most of last year. First quarter S &P 500 earnings growth is seen at 13 % annually, facts that said Friday. Since it's the last week of the quarter, volatility could be higher than normal the next two days amid window dressing.

5:10That's a term for fund managers shifting positions before the end of the quarter to add better performing names and drop worse ones. With the market down so much over the past few weeks, it's possible some late quarter short covering could emerge, but these aren't normal times geopolitically. During dramatic events not related to the market itself, it's more difficult to pinpoint things like technical support and demand to cover shorts. Major Wall Street indexes plunged in unison on Friday, carving new lows for the year as the S &P 500 index posted its lowest close since early August. Volume was thin late last week, however, which may imply there's not a lot of conviction behind the sell-off.

5:56This is traditionally a time of year when trading thin, thanks in part to spring break and the lack of earnings news. This week might see volume re-emerge as the new quarter begins and jobs data trickles in ahead of Friday's key non-farm payrolls. From a technical standpoint, the S &P 500 index remains in a downtrend below its 200-day moving average of 6 ,633. It may have a long drop to the next major area of support near 6 ,174, which corresponds with a 38.2 % retracement of the recent rally, a well-known Fibonacci retracement point. The SIBO Volatility Index, or VIX, topped 31 on Friday and is near its highs for the month.

6:42Investors are paying up for hedges with a strong bias toward puts. Risk sentiment could stabilize on credible ceasefire steps and clearer signals that transit through the strait is normalizing. I think one reason many folks are frustrated with this sell-off is because it isn't as sharp and by the dip-like as last year's, said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research. The one last year lasted 34 days. The current one is already 42 days old, but the percentage decline so far is less than half of last year's. By comparison, VIX is elevated now but nowhere near the levels seen during last April's post-tariff Liberation Day sell-off when it spiked above 60.

7:31Market breadth, the traditional sign of market health, has collapsed. Less than 20 percent of S &P 500 stocks now trade above their 50-day moving averages. That percentage topped 70 back in January. Eight of 11 S &P sectors ended Friday in the red. Energy surged amid the rise in oil prices, while cyclical sectors, including consumer discretionary, financials, and communications services, lagged. Staples and utilities, both traditionally defensive sectors investors turned to in cautious times managed gains. For the overall indexes, it's been a slow bleed all month. The S &P 500 index hasn't had a day where it's dropped 2 % or more yet, but it finished last week falling more than 1.5 % both Thursday and Friday.

8:20There seems to be little buying interest once the market falls. The Nasdaq composite is in correction territory, down 10 % from recent highs and 13 % from last October's record peak, while the S &P 500 is down almost 9 % from highs and would need to fall below 6 ,300 to approach a correction. After holding up relatively well early in the war, chip stocks are slipping. The PHLX Semiconductor Index dropped another 1.8 % on Friday, with chip leader NVIDIA sliding to nearly seven-month lows below$170 and memory stocks crumbling amid shortage in competition concerns. In individual trading Friday, many discretionary stocks fell sharply, as has been the case many days since the war began and oil started climbing.

9:11Some of the worst hit included airlines, which also suffered Friday when the U.S. House of Representatives failed to pass legislation that would have reopened the Department of Homeland Security and paid Transportation Security Agency workers. President Trump signed an executive order to pay the agents. Lines at airports continued, and shares of United Airlines fell 5%, while Delta Airlines fell 3%. Cybersecurity stocks, including CrowdStrike and Palo Alto Networks, lost 5.9 % and 6 % respectively. And For Fortune reported that Anthropic accidentally leaked details of a new AI model that poses quote-unquote unprecedented security risks.

9:57AstraZeneca rose nearly 3%, getting a lift from positive trial results from a drug that treats chronic obstructive pulmonary disease, CNBC reported. Cryptocurrency stocks fell sharply Friday as Bitcoin lost 4 % amid risk-off sentiment. The dollar index topped 100 again Friday near recent highs. It's now up more than 4 % from its late-January pre-war lows. The dollar's actually held pretty steady, Schwab's Martin said. I think there's a few reasons for that. One is the rise in yields we've seen. If yields rise or interest rate differentials come in a little bit, investors globally might see more value in U.S.

10:38dollar securities. The Dow Jones Industrial Average sank 793.47 points Friday, or 1.73 % to 45 ,166.64, the S &P 500 index dropped 108.31 points or 1.67 % to 6 ,368.85, and the Nasdaq Composite plummeted 459.72 points or 2.15 % to 20 ,948.36. For the week, the Dow Jones Industrial Average fell 0.9%, the S &P 500 shed 2.12%, and the NASDAQ Composite slipped 3.23%. This has been the Schwab Market Update Podcast. To stay informed, visit www.schwab.com slash marketupdate 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.

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