Fresh Jobs Data Next, Followed by Broadcom Later

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, June 3rd. Tech earnings pick up later today following additional jobs data. Stocks could be in a holding pattern over coming days ahead of Friday's May non-farm payrolls report and the waiting game for U.S. and Iran's negotiations over a proposed 60-day ceasefire extension that might help reopen the Strait of Hormuz. Crude oil ticked up yesterday, remaining in the low$90 per barrel for U.S. crude after falling below$90 last week. Today brings weekly U.S. crude inventories data, which saw a large withdrawal the prior week.

0:58More of the same might lend support to crude futures later this morning. Looking ahead, jobs data takes center stage. Friday's non-farm payrolls report is the crescendo after a long buildup that started yesterday with April job openings and continues today with a monthly look at private sector jobs growth from ADP. Analysts expect the ADP report to show growth of 110 ,000, roughly even with 109 ,000 in March, and well above the 12-month average. Last time out, services sector jobs far and away led gains fueled by education and health care. Goods-producing jobs rose just to 10 ,000 in March. It could be interesting to see if that ratio changes at all in today's report, considering the strength in manufacturing sector PMI over the last few months.

1:51ADP's data doesn't often correlate closely with data from the government, which surveys both households and businesses and looks at public sector employment as well as private. Other data on tap today include April factory orders expected to grow a solid 3.5 percent monthly, according to consensus from briefing.com and the ISM non-manufacturing index seen in expansion territory at 53.6 percent. Anything above 50 marks growth. The Fed's Beige Book of Regional Economic Trends arrives at 1 p.m. Eastern time and may get a closer look than usual, considering worries about inflation's impact on companies and consumers.

2:33It's worth at least a glance for a check on sentiment around the country. Two more jobs reports arrive early Thursday. The weekly initial jobless claims and monthly challenger layoffs data represent the last readings before Friday morning's critical May non-farm payrolls report. The consensus was down to 85 ,000 by Tuesday from close to 100 ,000 late last week and below April's 115 ,000 growth. Wage growth has seen up 0.3%, a slight improvement from 0.2 % in April. Since the start of the war in Iran, the U.S. economy has added 300 ,000 jobs. That's not the strongest relative to history, but considering a relatively unstable global backdrop, That's actually pretty good and shows some signs of resilience, said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research.

3:29When payrolls data hits, investors will likely seek signs that AI is impacting the labor market in terms of hiring activity and a pickup in layoffs. So far, that's only the case for the tech sector. Wage growth is also top of mind, given the fact that inflation-adjusted average hourly earnings growth continues to slide and is in negative territory. The April job openings and labor turnover survey, or JOLTS, out Tuesday easily topped expectations at 7.62 million. Consensus was 6.82 million. This also represented a sharp climb from 6.9 million in March. However, the number of people leaving their jobs fell below 3 million, perhaps a sign of stagnant wage growth or lack of perceived opportunity.

4:19Jobs data, followed by inflation data next week, could help set the stage for the Federal Reserve policymakers' debate at the June 16th and 17th rate meeting that's just two weeks away. This will be the first presided over by new Fed Chairman Kevin Warsh. As of late Tuesday, futures trading predicted the Fed to keep rates paused, according to the CME FedWatch tool. Chances of a policy move this year remained roughly 50-50, with chances of a cut almost nil. At this juncture, the best bulls seem to hope for is a pause at current levels that lasts all year, still a significant possibility at nearly 47%.

5:04Turning to corporate news, Broadcom's earnings dominate after today's market close. Broadcom's results can give investors fresh insight into hyperscaler AI spending. Yesterday, Broadcom's shares got a boost from Alphabet announcing a plan to issue$80 billion of equity. The issuance will help fund its AI computing infrastructure built out, Barron's reported. This could be good news for Broadcom, which helps design Alphabet's custom chips. Broadcom's guidance is worth watching for additional signs of AI demand trends. Investors likely want to see an outlook that tops Wall Street's expectations or else shares could face pressure.

5:45That's been the trend in AI and chips lately, where the bar is high for strong performance in this heavy demand environment. Cybersecurity firm Palo Alto Networks preceded Broadcom late Tuesday and shares initially surged 11 % in post-market trading. The company's quarterly results surpassed consensus, and it also shared above-consensus guidance, citing accelerating organic bookings growth. CrowdStrike, a competitor of Palo Alto, reports later today as well, keeping software in focus as the sector claws back from its early 2026 doldrums. Software stocks received support Monday from positive comments that NVIDIA CEO Jensen Huang made about the sector.

6:31Huang said AI agents will rely on, not replace, a broad range of software tools. Treasury yields continued heading lower Tuesday, but not by much as oil prices remained elevated. A Jolts report coming in stronger than expected initially pushed yields slightly higher, but traders appeared encouraged by the White House saying talks with Iran continue. Utility stocks, a sector highly sensitive to rates, enjoyed a rally Tuesday as yields stabilized. Seven of 11 S &P 500 sectors posted gains Tuesday in a move that was far broader than the one seen Friday and Monday. Semiconductors continued to play a lead role, helped by Marvell's dramatic gains and strength and shares of Broadcom ahead of earnings.

7:19Supermicrocomputer and Qualcomm also posted firm gains. At the same time, small caps turned around Monday's losses, with the Russell 2000 up 0.9%. The Dow Jones Industrial Average, less exposed to tech and AI than the S &P 500 index or NASDAQ, came in ahead of those indexes as well. The Nasdaq and S &P 500 barely climbed, but both posted new record closes. A mix of defensive and cyclical sectors topped the gainers list Tuesday, including utilities, materials and energy. Industrials and Infotech also forged positive sessions. Communication services dove 2 percent, hurt by Alphabet's losses. Market breadth remained weak at 53 % of S &P 500 stocks trading above their 50-day moving averages, but that's up from recent lows below 50%.

8:13It's still very light for a market at record highs and points to the narrow nature of this rally. Weak breadth can imply markets are more fragile. Major indexes appear overbought by some measures, and although index volatility remains relatively low, below 16 for the SIBO Volatility Index or VIX, individual stock volatility is quite high. Checking individual movers Tuesday, Hewlett Packard Enterprise surged 19 % following better-than-expected earnings and a guidance hike. Cloud and AI revenue rose 22.9 % year-over-year. Loop Capital upgraded shares to buy from Hold. Marvell climbed 32 percent after NVIDIA CEO Jensen Huang called the chips and networking company the next$1 trillion firm, Bloomberg reported.

9:08NVIDIA has a$2 billion collaboration with Marvell. Alphabet dropped 3.9 percent after introducing a plan to issue$80 billion in equity. The issuance will help fund its AI computing infrastructure bailout barons reported. This could be good news for Broadcom, which helps design Alphabet's custom chips and reports tomorrow. Lumentum rose more than 13 percent, partly on hopes that it could be helped by Alphabet's planned spending. Coherent was another AI supply chain stock helped by Alphabet's announcement. Shares of steel makers, including Cleveland Cliffs and Alcoa, along with other industrial commodities makers, rose Tuesday after the White House lowered tariffs on agricultural and other equipment from 25 percent to 15 percent.

10:00Microsoft fell 4 percent, even though it introduced a variety of different AI and cloud-related initiatives Tuesday. It's also partnering with NVIDIA on agentic AI deployment. Bitcoin futures sank more than 6 % back to lows seen last March. This put crypto-related stocks on their back feet with big losses for Strategy, Circle, Internet Group, and Coinbase. The Bitcoin sell-off might be technical in part, reflecting disappointment about it not topping the 200-day moving average. Money also appears to be flowing out of exchange-traded funds or ETFs to chase stocks. Victoria's Secret surged more than 47 percent.

10:46The company's quarterly results topped expectations and net sales rose 15 percent. The company also raised guidance. CME fell 3 percent and SIBO fell more than 8 percent, both clipped by the Commodity Futures Trading Commission, or CFTC, approving perpetual futures for Bitcoin trading. These futures products, which have no expiration date, could pose a competitive challenge for traditional exchanges, CNBC reported. The Dow Jones Industrial Average rose 228.91 points Tuesday, or 0.45%, to 51 ,307.79. the S &P 500 index climbed 9.82 points or 0.13 % to 7 ,609.78, and the Nasdaq Composite gained 7.09 points or 0.03 % to 27 ,093.90.

11:48This 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.

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