Apple Event, Treasury Auction Fill Time Before PPI

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, September 9th. Investors dig in today for another Treasury auction while awaiting key inflation data due tomorrow and Friday. Several earnings reports are also on tap tomorrow, including Oracle and Adobe after the close. Before that, Apple hosts an event at 10 a.m. Pacific time today that could include the introduction of a folding iPhone and a touchscreen MacBook, Bloomberg reported. Still, prime focus appears to be Thursday morning's August Producer Price Index, or PPI, and Friday's Consumer Price Index, or CPI.

0:55They're the last important data before next week's Federal Reserve meeting, and any sign that inflation inched up from recent benign readings might strengthen arguments for a rate hike next week. Last week's strong August jobs report eased one source of concern for the Fed, which likely wouldn't want a hike rate if the labor market struggled. Average monthly job growth of 71 ,000 over the last three months following recent government revisions looked decent, though down dramatically from a few years ago. For PPI, consensus is for monthly headline growth of 0.4 percent, but 0.2 % for core PPI, excluding food and energy.

1:35They were flat and 0.2 % respectively in July. Core annual PPI is seen at 4.6%, up from 4.2 % in July, and headline PPI is expected at 5.3%, up from 4.7%. CPI is likely the most important reading in terms of the Fed's next move, but both reports feed into the Personal Consumption Expenditures, or PCE, price report for August due later this month that serves as the Fed's favorite inflation indicator. The labor market is relatively healthy, but inflation continues to run above target, said Cooper Howard, Director of Fixed Income Research and Strategy at the Schwab Center for Financial Research. Fed Chairman Kevin Warsh's Jackson Hole speech lowered the bar for a hike this year, and if inflation comes in above expectations this week, it wouldn't be surprising if the Fed steps over the proverbial bar this year and hikes.

2:33As of late Tuesday, odds of a rate hike at the Federal Reserve's meeting a week from today stood at 60 percent, according to the CME FedWatch tool. The September meeting could be a last chance for the Fed to raise rates before December, since next month's meeting is directly before the U.S. midterm election.

2:55Treasury yields come under a microscope this week as larger liquidity buybacks recently announced by the Treasury kick in. The impact could be bullish for Treasuries, perhaps meaning lower yields. However, it's unclear if there is a long-term effect without the U.S. making more concrete action to deal with rising federal debt. A three-year Treasury note auction Tuesday saw a solid demand, Briefing.com said, but yields rose about two basis points across the board in trading yesterday as oil climbed and investors anticipated rate hikes overseas. The 10-year yield finished above 4.81 percent near highs last reached in late 2023.

3:37There's a 10-year note auction today with results expected early this afternoon. Any sign of slower demand might be seen as bearish for Treasuries. Tomorrow, the European Central Bank is expected to hike rates again, according to a Reuters survey of analysts. Crude rose again Tuesday after tit-for-tat weekend strikes between the U.S. and Iran and after Houthi attacks on Saudi Arabian oil facilities. Brent crude, the international benchmark price, hit$98 a barrel, and U.S. crude rose above$93, up 8 percent so far this month. Also overseas, the Japanese yen rose early this week on robust economic data and ideas the Bank of Japan could raise rates next week.

4:22Rising Japanese yields and currency can cause jitters in the U.S. amid concerns investors might turn to Japanese assets and away from U.S. assets like treasuries and the dollar. Turning to corporate news, Adobe and Oracle report after tomorrow's close, putting fresh focus on AI spending and software. But generally, it's a light earnings period. In data yesterday, there was slight inflation relief when the New York Fed's August Consumer Survey showed three-year inflation expectations down to 3.2 percent from July's 3.3 percent. Major indexes sagged again Tuesday after a one-day holiday, though the S &P 500 index remains less than 2 % below August's all-time high and above technical support near 7 ,600.

5:12Rising oil kept Wall Street in check. Healthcare woes sank the Dow Jones Industrial Average, mainly thanks to a 10 % plunge in Amgen following disappointing cardiovascular drug trial results from Novartis. Amgen is working on a similar treatment. Just three of 11 S &P 500 sectors closed higher Tuesday, led by energy as oil prices sizzled. Utilities and real estate also rose, but both are considered defensive sectors investors often turn to in troubled economic times. Infotech fell just slightly, helped by chips. Healthcare took the biggest tumble, down more than 2%, as Novartis fell almost 14%.

5:57Financials also had a tough day. Checking individual movers Tuesday, AI giants dominated gainers. Intel, advanced microdevices, and SK Hynix all climbed 4 % or more, though NVIDIA missed the rally. Recent strong results from NVIDIA and Broadcom injected the latest round of strength. Software shares went the opposite direction of chips in what's now a familiar yin and yang pattern. Adobe fell another 3 % Tuesday after weakening Friday following the announcement of its new CEO. Ford fell 4 % after the Trump administration criticized the company for dealing with Chinese companies, Reuters reported.

6:38SpaceX climbed 3.7 % after the Federal Communications Commission said it is pushing to make way for more spectrum to be used for faster broadband from space, Briefing.com reported. Corning jumped 7.5 % after Verizon Communications and Corning announced a supply agreement covering broadband expansion and AI infrastructure, Barron's reported Lumentum and other optical tech infrastructure stocks also rose Qualcomm climbed 3.2 % as it announced a partnership with Amazon to build data center infrastructure, Barron's said Peloton Interactive dropped 6.7 percent as Morgan Stanley downgraded shares to underweight from equal weight, citing structural headwinds in the company's business.

7:27Roy Vont Sciences spiked almost 19 percent following strong results in a trial testing its lung disease drug. Bloom Energy, Everpure and Illumina all jumped on news they'd be added to the S &P 500 index on September 21st, Barron's reported. Boston Scientific dropped almost 6 percent. The company said in a regulatory filing today it's unlikely to meet net sales growth and adjusted earnings guidance for the current quarter and full year, Barron's reported, amid fallout from a late August cyber attack. Copper rallied to record highs early Tuesday above$6.87 per pound and is up almost 20 percent this year, partly lifted by data center construction demand, the Wall Street Journal reported.

8:15Declining production and President Trump's threat to impose new import taxes on copper contributed to gains. And gold fell nearly 1.5 % as oil prices and Treasury yields remained firm and war concerns showed no signs of fading.

8:34The Dow Jones Industrial Average sank 628.18 points or 1.18 % Tuesday to 52 ,786.07. The S &P 500 Index fell 45.08 points or 0.58 % to 7 ,673.52. And the Nasdaq Composite lost 85.58 points or 0.32 % to 26 ,421.41. 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.

9:32For important disclosures, see the show notes and schwab.com slash market update podcast.