Jobs Data Next as Venezuela, Oil Prices Tracked

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, January 6th. After digesting weekend events in Venezuela, investors return today to face down a busy week of data, beginning with job openings and ADP employment early tomorrow. Today's calendar is light, meaning focus could remain on geopolitics, though over the course of history, it's important to remember that geopolitical events rarely have long-term market implications. The intervention of the U.S. into Venezuela is a more significant geopolitical event than a market event, Schwab experts said. While the situation in Venezuela remains in flux and will undoubtedly continue to shift moving forward, global markets have thus far taken the news in stride.

1:05From here, much will depend on the degree of the U.S. involvement in Venezuela's future path, how larger oil producers outside of both countries will respond, and whether the energy market has a tantrum. One concern is that the U.S. could get bogged down in the country as it did in Iraq and Afghanistan earlier this century. President Trump criticized the 2003 U.S. invasion of Iraq and its long-term occupation there, raising hopes that he would seek to avoid a similar scenario in Venezuela. A question some analysts asked Monday is how Venezuela will be controlled from here, with deposed President Nicolas Maduro's government still mainly in place.

1:48Also, choppiness in oil, which initially fell and then rose yesterday, could continue amid concerns about the potential commodities impact, though Venezuela isn't a major exporter. Its production once topped 3 million barrels a day, but is now below 1 million. That compares with U.S. production of 13 million barrels a day. Venezuela's biggest oil customer is China, but China only gets about 5 % of its oil imports from there. China's government criticized the U.S. move. The oil futures complex could feature prices falling sharply in the back months of the futures complex on anticipation of lower prices due to increased supply, Schwab experts said.

2:31Front months or near-term futures contracts likely won't be affected as much since it will take time, possibly years, for Venezuelan heavy crude to hit the market. We expect limited impact on the near-term decision-making by the Fed given the fluidity of the situation, Schwab experts said. However, if it looks like oil prices will trend lower and thus lead to lower gasoline prices, it would help ease the ongoing inflation problem and possibly set the stage for easier monetary policy. All else equal, this would be positive for the stock market.

3:08Turning to this week's data, ADP employment and job openings are due tomorrow before and after the open, respectively, paving the path to Friday's December non-farm payrolls report. Analysts expect the ADP employment change for December to be around 45 ,000, up sharply from a negative 32 ,000 in November, but still low historically. The November Job Openings and Labor Turnover Survey, or JOLTS, is expected to show around 7.6 million jobs waiting to be filled, roughly even with October. Estimates for Friday's government payrolls data have jobs growth near 55 ,000, with unemployment remaining at 4.6 % in December and weekly wages up 0.3%.

3:53The so-called whisper number on Wall Street for jobs growth is a lackluster 45 ,000. Even a figure that low would outpace the three-month average growth of 22 ,000. The strength or weakness of the labor market should be the key driver of Fed policy going forward, said Colin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research. Weaker-than-expected labor market data would likely result in more Fed rate cuts than the one-to-two cuts we're projecting this year. None of these numbers, if that's how it turns out, would likely spark much change in ideas about where the Federal Reserve might go this year.

4:32It cut rates three times in late 2025, but few analysts expect a follow-up cut later this month. The Fed forecasts one cut this year. At their last meeting, Fed policymakers brought up the idea of waiting to see the impact of recent cuts on economic data, as the effect can take a while to show up. The futures market prices in 16 % odds of a January rate cut as of late Monday, according to the CME FedWatch tool. Earnings remain sparse before fourth quarter reporting season starts with big banks a little over a week from now. Tomorrow afternoon brings quarterly results from Constellation Brands, a supplier of several popular alcoholic beverage brands.

5:16December's ISM Manufacturing PMI released yesterday had a headline of 47.9 % down from 48.2 % in November. A headline of 50 % or above is needed to show expansion, and December marked a 14-month low. Estimates coming into the report were around 48.3%. The important prices category was flat, but still elevated at 58.5, a sign that inflation remains stubborn. New orders and employment ticked up, but remained in contraction along with the headline index. Those surveyed in the December ISM index mentioned tariffs six times and pointed to them as a driver of weaker revenue and consumer spending. Another item to monitor in coming days is CS2026, a global trade tech show focusing on robotics, AI, and wearables.

6:13Jensen Huon, CEO of NVIDIA, held a press conference at CES late yesterday, and Lisa Su, CEO of Advanced Microdevices, gave the keynote address. With CES in focus, some of last week's late improvement in chip performance has a chance to continue, and the PHLX Semiconductor Index rose more than 1 % Monday, despite weakness in Broadcom and NVIDIA. Treasury yields stepped back Monday after the events in Venezuela. The benchmark 10-year yield remains near the upper end of its recent range between roughly 4 % and 4.2%. The close yesterday, down two basis points at 4.17%, keeps it close to the 4.2 % level that might raise eyebrows.

6:59The initial dip in yields was likely due to the potential for long-term inflation expectations to fall on the heels of potentially lower oil prices rather than a flight to quality trade, Schwab-Smartin said. We don't suggest investors make impulsive investment decisions on headlines like these, however, as the situation is very fluid. Speaking of fluid, estimates for fourth-quarter U.S. gross domestic product growth are falling. The latest Atlanta Fed GDP Now forecast is 2.7 % on a seasonally adjusted annual basis, down from the previous 3%. U.S. crude oil futures popped nearly 2 % Monday after the Venezuela events.

7:41As with treasuries, crude stayed within its recent range, not far from one-year lows recorded last month. Metals futures resumed their volatile trading Monday, another signal that many speculators may be rotating out of crypto and to areas like silver, platinum, and palladium. Silver climbed 7.9 % yesterday to finish above$76 per ounce near record highs. Copper climbed 5.1%. Recent strength in the metals and associated stocks might have legs due to the speculative element, with some of the former crypto froth moving into this space. In Stock Trading Monday, major indexes got off to a positive start for the week, with strength most evident in the Dow Jones Industrial Average and the small-cap Russell 2000.

8:31This partly reflects strength in energy and financials, both of which are well-represented in those indexes. The Dow Jones Industrial Average closed at a record high. Consumer stocks also had a solid session, but Infotech slipped. From a sector perspective, the year begins with market breadth strongest in financials and materials, reflecting some of the recent rotation out of tech and communication services, the leading two sectors of 2025. Almost 90 % of materials stocks trade at or above their 50-day moving averages, though to some extent that reflects recent strength in precious metals that appears fueled by speculative buying.

9:13Among individual movers yesterday, Chevron climbed more than 5%. It may be the best positioned among global oil giants to immediately benefit from U.S. access to Venezuelan oil, Bloomberg reported. Chevron wasn't alone. Halliburton and SLB also climbed double digits. Valero was up 9 % after CNBC reported the company could be well-equipped to deal with sulfur-rich oil from Venezuela. Large banks performed well Monday, too, ahead of next week's full slate of earnings from the biggest Wall Street firms, starting a week from today with JPMorgan Chase. Comcast rebounded from early losses Monday to rise 1.6%.

9:55Shares of its spinoff Versant Media, however, fell more than 14 percent. The media companies finalized a split late Friday, with Versant representing the cable television portfolio. Defense firms Lockheed Martin and Northrop Grumman rose nearly 3 percent and more than 4 percent, respectively, Monday following the U.S. military action. Okta rose 6 percent after the Identity and Access Management Company announced a$1 billion share repurchase program. And Bitcoin rose 4.8 % Monday, and crypto-related stocks also climbed as risk sentiment appeared to improve. Bitcoin futures posted their best close since mid-November.

10:41The Dow Jones Industrial Average added 594.79 points Monday, or 1.23%, to 48 ,977.18. The S &P 500 index climbed 43.58 points or 0.64 % to 6 ,902.05. And the NASDAQ Composite gained 160.19 points or 0.69 % to 23 ,395.82 and breaking a five-day losing streak. 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.

11:41For important disclosures, see the show notes and schwab.com slash market update podcast.