Jobs, Confidence Data Next Amid Flurry of Earnings

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 Tuesday, July 29th. Monday featured more record highs after the trade agreement between the U.S. and European Union, and this week's crowded calendar starts to flex its muscles today. Job openings, consumer confidence, and a host of earnings reports loom, including from major consumer-oriented firms like Visa and Starbucks. Today also marks the start of the Federal Reserve's meeting with a rate decision due tomorrow, but very low odds of a change. The June job openings and labor turnover survey, or JOLTS, at 10 a.m. Eastern time could provide clues on hiring.

0:59Analysts expect June job openings to drop to around 7.3 million from 7.77 million in May. The quits rate is also closely watched as it shows how confident people are leaving their jobs to find new positions. Quits tend to fall in a slow hiring environment. Right now, both hiring and firing appear to be on the low side. July consumer confidence from the conference board, also due at 10 a.m. Eastern time, could provide job market hints as well. 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.

1:48This week also features earnings from Apple, Amazon, Microsoft, and Meta Platforms bunched together Wednesday and Thursday afternoons. Together, these firms make up nearly 20 percent of the market capitalization of the S &P 500 index. Today has its own set of earnings results, however, including Boeing, UPS, and UnitedHealth before the open. The Fed meeting starts with futures trading putting odds of a rate cut at around 3 percent, according to the CME FedWatch tool. For the first time in a while, the meeting might see a descent or two after some Fed policymakers recently called for a July cut.

2:28Fed Chairman Jerome Powell's press conference might offer hints of any internal rumblings as well as his thoughts on the September odds. This Fed meeting won't include new economic or rate projections, but many participants expect Powell at his post-meeting press conference tomorrow afternoon to indicate a September cut is possible if data allow. The futures market put chances of a September cut at 64 percent.

2:57Yesterday, the U.S. Treasury announced its refunding financing estimates for the quarter. This can give hints into how much the Treasury needs to borrow with a potential rate impact. Back in April, the government pegged July through September borrowing needs at$554 billion. Before that, the U.S. and European Union announced a framework trade deal Sunday that slaps 15 % tariffs on European imports. It's also designed to drive Europe to invest in U.S. energy and defense products, giving stocks in those areas a lift to start the week. Markets appeared to welcome the agreement for potentially easing uncertainty.

3:38A 15 % tariff rate, the same one Japan agreed to last week, is below President Trump's previously threatened 30 % tariffs on Europe, but tariffs on imported goods averaged around 3 % when the year began, so investors should consider the possible negative impact of 15 % on corporate balance sheets and inflation. More trade talks are underway with China this week on details of the framework deal reached a month ago, and a deal with India still needs to be ironed out before Friday's deadline. The deadline for China is August 12th, but there's talk of a 90-day delay. Tariff worst-case outcomes appear off the table for now, said Michelle Gibley, director of international research at the Schwab Center for Financial Research.

4:24Tariff rates are up sharply from the start of the year, and we don't know where the rates will settle. Larger trade partners and sectors yet to be decided include Canada, Mexico, and Taiwan, as well as pharmaceutical and semiconductors. A China deal is also outstanding, but tensions appear to have eased. Still, Ghibli added, if a large trade partner like Canada has trouble getting a deal and escalation returns, so could stock market volatility. Speaking of volatility, it did pop Monday, but remained near lows for the year at just above 15.1 late Monday for the SIBO Volatility Index, or VIX. Some of Monday's rise could indicate market anxiety heading into earnings and data, as well as worries about Fed independence.

5:11Low volatility in and of itself can sometimes be a contrarian indicator, meaning a precursor of higher volatility and potential market weakness, but nothing is guaranteed. The VIX futures complex is in contango, meaning contracts later this year are priced well above the spot level, rising to more than 20 by late October. This could partly reflect worries about seasonal market weakness. Major indexes struggled through much of Monday's session despite recording new highs early in response to the trade deal. It's possible last week's string of record highs built in the good news and some participants decided to take profit ahead of the Fed meeting and mega cap results.

5:55A slight rise in Treasury yields followed a mixed outcome for the Monday's two-year and five-year Treasury auctions also contributed to pressure. That showed up in Sector Results Monday as more rate-sensitive sectors like real estate and utilities performed poorly. Weaker gold and copper prices hurt materials sector stocks, though both commodities remain near record highs. The trade deal includes promises by the EU to buy more U.S. military goods. So shares of Cleveland Cliffs, Boeing, ASML, Kratos Defense, ExxonMobil, Chenier Energy, Deere, Tesla, and other firms that could benefit from an improved trade climate between the EU and the U.S.

6:36gained ground Monday. The deal includes a promise by Europe to replace Russian gas and oil with significant purchases of U.S. liquefied natural gas, oil, and nuclear fuels. Energy stocks led all sectors Monday, but Infotech wasn't far behind. With PayPal, Royal Caribbean, Merck, and Procter & Gamble reporting today and all up recently, investors might want to check action in those shares after the results. There's been some sell-on-the-news action after earnings lately, especially for stocks rallying into their reports. Technically, yesterday's close looked resilient. For a while, it appeared another record-closing high would be unachievable, but the index found buyers in the last half hour to avert a decline.

7:24The last lower close for the S &P 500 index was July 18th, but many of the recent settlements have been barely above the previous days, suggesting momentum may be waning. The Nasdaq also posted another record high close Monday. It's difficult to go against trend, especially when markets are steadily marching to all-time highs in price discovery mode, said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. Although we are near-term overbought, oftentimes traders will ride the prevailing trend until a technical reversal pattern shows up before shifting to a more cautious stance.

8:04Such a reversal hasn't shown up yet in the charts, he added. The Dow Jones Industrial Average slipped 64.36 points Monday, or 0.14%, to 44 ,837.56. The S &P 500 Index inched up 1.13 points, or 0.02%, to 6 ,389.77. And the Nasdaq Composite gained 70.27 points, or 0.33%, to 21 ,178.58. 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.

9:08For important disclosures, see the show notes and schwab.com slash market update podcast.