Job Openings, Salesforce Next Amid Tariff Concerns

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 Wednesday, September 3rd. After investors scrutinized this morning's job openings data, software giant Salesforce reports later. Shares have been on a comeback trail, but most of the software sector limped into September amid concerns that AI could hurt business. Still, tariff concerns remain front and center after yesterday's market dip. Last time out in late May, Salesforce impressed with better-than-expected results while raising guidance.

0:50In today's report, subscription growth remains a key factor to watch for demand trends. Analysts expect Salesforce to report earnings of$2.78 per share. Broadcom's earnings arrive tomorrow afternoon, but Friday's August non-farm payrolls report looms over everything else. Analysts expect relatively weak jobs growth of 78 ,000, barely up from 73 ,000 in July. The unemployment rate is expected to rise to 4.3 percent, which would break a streak of 15 straight months, where it's held between 4 percent and 4.2 percent, said Colin Martin, director of fixed income strategy at the Schwab Center for Financial Research.

1:29A rate cut in September seems likely regardless of the strength or weakness in Friday's labor market report, but it can have implications for policy down the road. Before the payrolls report, today's July job openings and labor turnover survey, or jolts, at 10 a.m. Eastern time takes the stage. June saw job openings at 7.37 million, relatively light compared with recent months, and down 275 ,000 from May. Another slide might cause more concern about the jobs picture, where hiring has remained lethargic, but layoffs also haven't spiked. Between today's job openings and Friday's payrolls, the data could go a long way toward providing clarity on the Federal Reserve's moves beyond September.

2:16Odds of a rate cut are baked in at the September 16th and 17th meeting, but there's uncertainty after that, according to the CME FedWatch tool. The Fed has more on its plate, with a Senate Banking Committee confirmation hearing at 10 a.m. Eastern Time tomorrow for Stephen Moran, Trump's nominee to fill a Fed vacancy. The hearing could offer more drama than usual after President Trump attempted to fire Fed Governor Lisa Cook last week, raising concerns. Moran maybe asked his thoughts on the firing after several high-profile CEOs spoke out in favor of Fed independence over the weekend. Broadcom's results offer a look at software demand as well as the AI picture.

3:00This follows earnings from NVIDIA last week that appeared to disappoint investors, despite beating estimates. Possible AI competition from China also weighed on tech stocks to start the new week, after the Wall Street Journal reported on a new AI chip developed by Chinese firm Alibaba. Concerns about a court ruling striking down Trump's tariffs also played a role in Tuesday's uncertain trading. The tariffs remain in place until October 14th under the ruling, but the case appears likely to be decided by the Supreme Court. Trump said late yesterday he wants an expedited ruling, CNBC reported. The weekend ruling triggered concern that a removal of tariffs might force the U.S.

3:44government to pay back what it's collected, exacerbating the budget deficit. But as Briefing.com pointed out, Treasury yields didn't spike yesterday, as they might have if those concerns were elevated, and the pullback on Wall Street yesterday could reflect a sense that tech stocks were due for a breather following recent record highs. In Data Tuesday, the August ISM Manufacturing Index was 48.7%, up slightly from 48 % the prior month, but still below the 50 % needed to signal expansion. Consensus for ISM, an important glance at U.S. manufacturing sector health that can have an impact on trading in the industrials and materials sectors had been 48.6%.

4:26It was the sixth straight month of contraction for the slumping U.S. manufacturing sector, and many survey respondents blamed supply chain disruptions and higher costs related to tariffs. In other data, the Atlanta Fed's GDP Now indicator dropped to 3 % for third-quarter gross domestic product, or GDP, growth, down from 3.5 % previously. This includes anticipated declines from past estimates in personal spending and private investment growth. Factory orders for July hit the tape at 10 a.m. ET today, and analysts expect a 1.4 % monthly drop. In trading Tuesday, Treasury yields rose across the curve, but not by a large amount, and finished off their early highs.

5:09A 10-year yield at 4.28 % remained in its long-term range between roughly 4.20 % and 4.30%. As Treasuries clawed back through the session yesterday, so did stocks. The S &P 500 index, which dipped early Tuesday to three-week lows near 6 ,360 and below the key 20-day moving average of 6 ,421, made it almost all the way back to that chart line by the close, climbing nearly 60 points from its intraday low. Still, the close below the 20-day average was its first in more than a week, and it's a level worth eyeing today. The Nasdaq Composite also closed below its 20-day average of 21 ,431 and appears to be losing its grip of that level over the last two weeks as tech continues to struggle.

6:01The late comeback Tuesday didn't seem to reflect any fundamental news. A buy-the-dip pattern has lasted for months, and this might be more evidence. There also might be reluctance among investors to push or pull stocks too far in any direction ahead of Friday's jobs data. The tech sector fell 1 % on Tuesday, only beating two other sectors, and just three sectors gained ground. At one point early, more than 400 S &P 500 stocks were in the red. Seasonal factors might be at play, with the S &P 500 averaging worse than 1 % losses for the month of September since 1928 and gaining just 44 % of the time.

6:42Both the S &P 500 index and NASDAQ drew most of their summer support from mega caps, which can overemphasize the power of the broader market with their heavy capitalizations. Breadth, which measures the strength and weakness of broad trends, has generally held up well despite the dominance of mega caps, indicating health beneath the surface. If tech remains under pressure, it will be important to monitor breadth for any signs of broader weakness that would leave indexes unsupported by other sectors. Magnificent Seven stocks flagged Tuesday as the semiconductor sector fell 1.5 % and other tech stocks also lost ground.

7:21CoreWeave, a cloud computing firm, suffered double-digit losses, reflecting insider sales after its initial public offering, Barron's reported. Other tech stocks falling 2 % or more yesterday included chip equipment maker ASML, Super Microcomputer, and NVIDIA, although the AI giant finished off its loads. Healthcare and Staples firms did better, with Humana, Eli Lilly, PepsiCo, and Merck rising. Kraft Heinz, however, dipped 7 % on news that will break into two companies that will separate hot dogs from ketchup, NPR quipped. The two companies had merged in 2015, but shares are down 70 % since then.

8:03The Dow Jones Industrial Average sank 249.07 points Tuesday, or 0.55%, to 45 ,295.81. The S &P 500 Index gave up 44.72 points, or 0.69%, to 6 ,415.54. And the NASDAQ Composite fell 175.92 points, or 0.82%, to 21 ,279.63. 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.

9:01For important disclosures, see the show notes and schwab.com slash market update podcast.