Apple Event, Jobs Update, Oracle Precede PPI Data

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 Tuesday, September 9th. Investors brace for Apple's product event, Oracle's earnings, and a jobs update later today. All that could pale, however, if tomorrow's producer price index, or PPI, holds any surprises. Inflation is the next piece of the rate puzzle. the July PPI reading of 0.9 % surprised investors and rattled markets. August data due at 8.30 a.m. ET tomorrow could reinforce ideas that tariff-related price pressures is starting to creep into wholesale prices.

0:56However, consensus is for milder readings, with Briefing.com expecting 0.3 % for both headline PPI and core PPI, which strips out food and energy costs. Anything above that could pull back already low odds of the Federal Reserve cutting rates by 50 basis points instead of 25 at its meeting next week. Last September, it cut by 50, but at that time, inflation was falling and tariffs weren't a factor. With inflation still elevated, it will be difficult for the Fed to aggressively cut rates, said Cooper Howard, director of fixed income strategy at the Schwab Center for Financial Research. As of late Monday, futures trading indicated 100 percent odds of a rate cut next week, but 12 % odds of 50 basis points instead of 25.

1:42For the full year, futures trading points towards three rate cuts, but that has vacillated between two and three as data pour in.

1:53Earnings aren't over just yet. Oracle reports after the close today, and analysts expect about $15 billion in revenue, a year-over-year increase of 12.8%. The consensus earnings per share estimate is$1.48. Beyond the headlines, focus will likely be on growth in Oracle's cloud and data center business, its order backlog, and whether those contracts are converting to revenue and progress in its Stargate data center partnership with OpenAI. In another tech-related development, Apple holds a product event later today expected to highlight the iPhone 17. These events were legendary back when they included the late Steve Jobs, but they haven't had the same market impact in recent years.

2:42Today also brings more jobs data, and while it looks well into the recent past, it could provide more clues into the overall employment picture and even move markets. The Bureau of Labor Statistics is scheduled to release its preliminary revision to employment data for the 12 months ending last March. Last year, this revision subtracted 800 ,000 jobs from prior employment reports, but analysts don't expect that much this time. Instead, Barron's reported that expectations are in a wide range for a net loss of between 475 ,000 and 790 ,000 jobs. Even if the number is on the lower end of expectations, it would mean subtracting about 40 ,000 jobs from the average monthly report for the period covered, putting jobs growth near 110 ,000 on average for that stretch versus 150 ,000 now.

3:34While the economy continues to grow, the hiring has slowed substantially, perhaps reflecting tariff uncertainty. This could change if companies eventually get a sense that policy will stay put rather than bounce around, and perhaps when litigation challenging the tariffs gets decided by the Supreme Court. In the meantime, Time, however, jobs growth may remain slow, with companies hesitant to hire amid lack of clarity around the ultimate level and impact of tariffs. Monday saw the stock market settle higher after some back-and-forth trading, with tech taking the lead. Still, investors seem uncertain ahead of the data this week and with the Fed decision a week away.

4:16With markets at or near record highs, conviction appeared to flag as the day unfolded. That squared with recent commitments of traders' data showed more of a risk-off sentiment developing in the equities market, even as investors cover short positions in treasuries and go long fixed income. If this becomes a trend, it could suggest stronger treasury markets and chances of falling yields amid hopes for rate cuts. At the same time, volatility measured by the SIBO Volatility Index, or VIX, remained below the long-term average of 20 by quite a bit, trading below 16 to start the week. However, the VIX curve is in contango, meaning contracts further out toward early next year do reflect concern about volatility, climbing above 21.

5:05Checking individual performance Monday, Apple 11 soared more than 11 % after the mobile tech company got added to the S &P 500 index. Other tech stocks, including Marvell, Broadcom, Palantir, ASML, and Oracle also showed strength. while NVIDIA regained some of last week's losses as the semiconductor sector enjoyed a positive session. Late in the day, NVIDIA said the company has received H20 licenses for key Chinese customers, a positive sign that the company might get some H20 revenue out of that country in the near future. The Trump administration recently allowed NVIDIA to sell the chip there after preventing the company from that earlier this year.

5:46But NVIDIA didn't guide for any H20 sales in China this quarter. Shares of Verizon, T-Mobile, and AT &T fell 2 % to 4%, while shares of EchoStar climbed 18%. This came after EchoStar announced a$17 billion cash-plus-stock agreement to sell the company's AWS4 and H-Block Spectrum licenses to SpaceX, Barron's reported. The acquisition would allow SpaceX to offer its own direct-to-device mobile service more independently, according to Bloomberg, which noted that SpaceX already has a partnership with T-Mobile. Treasury yields descended another 1 % Monday to 4.04 % for the 10-year Treasury note after Friday's weak jobs data.

6:35Also, a New York Fed survey released Monday showed respondents more concerned about unemployment while less concerned about inflation. Though falling Treasury yields, now at their lowest since April, reinforce expectations for a dovish Fed, this week's inflation data remain a possible barrier to any steep rate cuts. The Fed will also issue updated projections for the rate path next Wednesday, and that will help investors assess how cautious policymakers are about the longer road beyond September. While we do expect some slowing in economic growth due to tariff impacts and cuts to some federal government programs and employment, two rate cuts are probably enough for now, said Kathy Jones, chief fixed-income strategist at Schwab.

7:21More than that would require a much weaker economy, a significant deterioration in the labor market, and or much lower inflation. Though some tech stocks had a solid Monday and many sectors turned around losses toward the close, the market spent much of the day fighting to keep early gains. Six of 11 S &P 500 sectors lost ground, with the worst performance in defensive parts of the market like staples, real estate, utilities, and health care, despite falling treasury yields. Only tech and consumer discretionary posted solid gains, but the S &P 500 index managed a slightly higher close, while the Nasdaq Composite settled at a new all-time high.

8:03Small caps also rose. Breadth, the measure of how weak or strong a market's movement is, has flattened over the last week at around 55 % for the S &P 500 in terms of stocks trading above their 50-day moving averages. That's still above the short-term average, but off highs this summer that topped 80%. And the Relative Strength Index, another measure of technical health, recently stood at just under 60, also near the average over the last few months, but well below highs above 75 earlier this summer.

8:39The Dow Jones Industrial Average rose 114.09 points Monday, or 0.25%, to 45 ,514.95. The S &P 500 index added 13.65 points, or 0.21%, to 6 ,495.15, and the Nasdaq Composite climbed 98.31 points, or 0.45%, to 21 ,798 .70. 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.

9:36For important disclosures, see the show notes and schwab.com slash market update podcast.