Fully Booked: Fed, Jobs Data, Mag 7 Results Loom

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 Monday, July 28th. A Federal Reserve meeting, earnings reports from four of the so-called Magnificent Seven, more than 100 results from other S &P companies, and a full plate of Treasury auctions are just a few items to brace for this week. Not the least of those other things is non-farm payrolls for July on Friday. That day also features a crucial June inflation report. Before that, investors await tomorrow's job openings data and Thursday's first estimate of second quarter gross domestic product or GDP growth. The Atlanta Fed's GDP Now tool kept its GDP estimate at 2.4 % Friday unchanged from a week earlier.

1:03If there's one number that could define the week, it's Friday's July jobs growth. Analysts have conservative estimates, the average being near 110 ,000. That's down from 147 ,000 in June. However, jobless claims have been falling steadily down six weeks in a row. This doesn't necessarily indicate heavy hiring, but could suggest a slow down in layoffs after tech companies cut thousands of positions earlier this year. Tomorrow's June job openings and labor turnover survey, or JOLT, could provide clues on hiring, and the monthly Challenger job cuts report could offer firing details on Thursday. Analysts expect June job openings to drop to around 7.3 million from 7.77 million in May.

1:51July consumer confidence from the conference board early tomorrow could also provide job market hints. At 93 in June, it was down significantly from 98.4 in May. Back in February, the last month before tariff concerns gripped the market, it was above 100. Investors might want to watch one-year inflation expectations for a deeper look into consumer thinking. This week also features earnings from Apple, Amazon, Microsoft, and Meta Platforms. before they report wednesday and thursday investors received what might be a positive sneak preview from alphabet's results last week cloud growth of 32 percent was up sequentially and might bode well for cloud powerhouses microsoft and amazon though if their cloud businesses grew more slowly it could mean alphabet taking share and the solid quarter for alphabet's search business suggests advertising demand remains strong, perhaps a positive signal for Meta.

2:55With 33 % of S &P 500 companies reporting through Friday, 84 % have surpassed the consensus estimate on earnings per share and 67 % did on revenue. S &P 500 earnings per share is tracking for 9 % growth on a blended basis, combining companies already reporting and those yet to report. The quarter began with analysts projecting 5.8%. However, earnings projections are top-heavy. Vaxxed expects 14.1 % growth for the Magnificent Seven, but just 3.4 % for the other 493 firms. The Fed meeting could be anticlimactic, considering the CME FedWatch tool puts rate-cut chances below 3 % at this meeting and doesn't include new projections from policymakers.

3:45However, Fed Chairman Jerome Powell's press conference will be under a microscope for any hints that the central bank might lean toward a September cut. Futures trading plugs in a 64 % chance. We don't expect the Fed to cut rates next week, but it would not be a surprise if they hint that rate cuts are coming, said Cooper Howard, Director of Fixed Income Strategy at the Schwab Center for Financial Research. In data late last week, June durable orders fell 9.3 % on the month, better than the negative 11 % briefing.com consensus. Durable orders excluding transportation rose 0.2 % above expectations for a 0.2 % decline, but down from a revised 0.6 % in May.

4:33Beneath the surface, investors have a collective eye on several treasury auctions in coming days that could provide direction for the benchmark 10-year yield after it teeter-tottered the last week within the near-term range between 4.3 % and 4.5%, basically aligned with Fed funds levels. The 10-year fell two basis points Friday and four on the week to finish just below 4.4%. Today features a two-year note auction and a five-year note auction, results of which should be available before trading ends. Later, the U.S. Treasury is due to announce its refunding financing estimates, and investors often watch this to see how much the Treasury intends to borrow and how it plans to structure its debt offerings between short and long-term notes and bonds.

5:21Today's calendar is relatively light apart from the two auctions, but investors are on guard for any updates on trade deals, with Friday representing the deadline threatened by President Trump. A deal with Japan last week cheered investors, but Europe is the big fish that the administration has yet to reel in. If it ends up being the one that got away, heavy tariffs could take effect and bring reprisals against U.S. products. Recent trade deals removed a layer of uncertainty and offer a potential blueprint for future agreements. The 15 % tariffs levied on Japan, for instance, look far better than the 25 % or 30%.

6:01Still, 15 % is high and will likely have economic repercussions. We've seen that in recent General Motors earnings, while other industrial firms have reported concerns with input pricing as well. If Treasury auction demand doesn't impress, it could move yields higher, a possible weight on stocks. A seven-year note auction tomorrow, and the Fed's rate decision and press conference Wednesday could keep Treasuries in an influential position. Last week saw Trump retreat from threats to fire Powell, but Powell and company are likely to give Trump the rate cut he wants. The signal from the labor market is that it's holding up, said Kathy Jones, chief fixed-income strategist at Schwab.

6:45Pressure on the Fed to cut rates is likely to fall on deaf ears until at least September. Trading could be cautious early this week, with Friday's deadline approaching and all the data and earnings ahead. From a technical angle, breadth, a helpful measure of investor sentiment, continues to improve. As of Friday, 70 % of S &P 500 stocks traded above their respective 50-day moving averages and 61 % above their 200-day. From a breadth standpoint, utilities, communication services, and consumer discretionary led the way. Major indexes made more all-time highs Friday, including the fifth in a row for the S &P 500 index, but the Dow Jones Industrial Average remained below old highs from last December.

7:34It was clipped by weakness in UnitedHealthcare, IBM, and Honeywell. Outside of the Dow, strong momentum on the trade front, including upbeat comments from the White House Friday on progress with China and Europe, and solid earnings from Alphabet helped fuel the rally, even as the broader economic backdrop remains uncertain. Checking sectors, materials, industrials, and consumer discretionary led the way in Friday's broad rally, with only communication services and energy lower. All 11 S &P 500 sectors rose over the last week, led surprisingly by health care in what may reflect a shift out of traditional growth sectors.

8:16Many of those, including consumer discretionary and infotech, were below the midpoint in recent sector performance. Infotech and consumer discretionary both took hits from earnings last week, namely from Tesla and Intel, respectively.

8:35The Dow Jones Industrial Average climbed 208.01 points Friday, or 0.47%, to 44 ,901.92. The S &P 500 Index added 25.29 points, or 0.40%, to 6 ,388.64. And the Nasdaq Composite rose 50.36 points, or 0.24%, to 21 ,108.32. For the week, the Dow Jones Industrial Average added 1.26%, the S &P 500 rose 1.46%, and the NASDAQ rose 1.02%. 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. It really helps new listeners find the show.

9:36Join us for another update tomorrow.

9:43For important disclosures, see the show notes and schwab.com slash market update podcast.