Jobs News Next After Rally but Geopolitics Intrude

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 Colette O 'Claire, and here is Schwab's early look at the markets for Wednesday, January 7th. A market that's arguably starved for data finally gets some today, along with a rare earnings report citing also the geopolitical situation remains in focus after weekend events in Venezuela and new scuttlebutt late Tuesday about Greenland. Though geopolitics rarely affect markets in the long term. CNBC's report late Tuesday, citing a White House source who said President Trump is considering a range of options to acquire Greenland, including using the U.S.

0:53military, might raise concerns on Wall Street. Greenland is a self-governing territory that's part of the Kingdom of Denmark, a NATO ally of the U.S. Turning back to data, the December ADP employment report comes out about an hour before the open. Consensus from briefing.com is for a gain of around 45 ,000, not a historically high amount, but far better than the loss of 32 ,000 in November. That's followed shortly after the opening bell by the November Jobs Opening and Labor Turnover Survey, or JOLTS report, often a good tracker of demand from employers and sentiment among job holders. JOLTS is expected to show around 7.6 million jobs waiting to be filled, roughly even with October.

1:39That keeps it in the same range it's been most of the last year, between roughly 7 million and 7.8 million. As always, it's important to monitor the quits rate, which tracks how many people left their jobs that month. When more people quit, it's seen as a healthy sign of a fluid jobs market in which new positions are ample. Estimates for Friday's government non-farm payrolls report put jobs growth near 55 ,000, with unemployment steady at 4.6 percent in December and weekly wages up 0.3 percent. The so-called whisper number on Wall Street for jobs growth is a lackluster 45 ,000. The last several jobs reports have disappointed, and data could help determine if and when the Federal Reserve cuts rates again.

2:27Next week's inflation data is also key. And later today at 10 a.m. ET, investors received the ISM services PMI for December. The headline came in at 52.6 % in November, meaning it was above the 50 % level needed for expansion. Prices remained high in November and could be under close scrutiny this time out, after Federal Reserve Chairman Jerome Powell said last month that services inflation is coming down. There was a smattering of data yesterday. S &P Global Services PMIs were slightly below estimates, but still in expansionary territory. The numbers didn't appear to have much impact on Treasury yields.

3:10Checking geopolitics again, the fallout from U.S. weekend action against Venezuela is still playing out, raising questions about the future path of that country's oil industry. Several energy stocks performed well Monday before falling Tuesday, and the Trump administration yesterday offered an optimistic assessment that U.S. oil firms could be up and running within 18 months in Venezuela. Representatives from major U.S. petroleum companies meet with the administration later this week, CBS News reported. In another geopolitical development, the Supreme Court announced it will release opinions this Friday.

3:51One of the ones investors are waiting for is on President Trump's tariffs, a case argued before the court late last year. It's unclear if that ruling will be announced Friday, but it's a potential catalyst for stocks, especially if the court rules against the administration.

4:09Earnings season begins next week when major banks begin reporting. Before that, it's slim pickings, but at least today there's something on the schedule. Constellation Brands, a supplier of several popular alcoholic beverage brands, including Modelo, reports after the close today. Last time out, Constellation reiterated lower full-year guidance, though it beat quarterly earnings and revenue estimates. Investors likely will pay close attention to operating margin, which fell the prior quarter in part due to U.S. aluminum tariffs, CNBC reported at the time. Treasury yields moved little Tuesday, but short-term yields gained slightly versus long-term ones.

4:49Jobs data this week could be a catalyst for treasuries, with yields possibly pulling back on any weaker-than-expected numbers. Long-term yields have generally climbed lately, a possible indication that investors expect robust economic news. The futures market priced in 18 % odds of a January rate cut as of late Tuesday, according to the CME FedWatch tool. That's little changed over the past week. The metals market grabbed headlines recently, with big moves for silver, copper, and palladium, among others. Silver rose 5 % yesterday, and copper hit new highs with a 1.5 % gain. That speculative trend in metals could be a sign of rotation out of cryptocurrencies, as some of the crypto froth moves into new space.

5:38In general, it looks like traders hungry for volatility have made their transition over to metals, which could spark more volatility in that space. Bitcoin futures slipped almost 2 % yesterday as metals surged. More on today's market action in a minute, but if you'd like to receive market news and actionable insights from Schwab's experts, sign up for the daily market update and more at schwab.com slash newsletters. On Wall Street Tuesday, all major indexes turned green as the Dow Jones Industrial Average and the S &P 500 Index marched to new all-time highs amid chip market enthusiasm, possibly sparked by an industry conference.

6:20The Small Cap Russell 2000 Index outpaced all other big indexes Tuesday and neared one-month highs, despite little help from Treasuries. Much of recent outperformance has occurred in the industrial, materials, healthcare, and financial sectors as market breadth widens. These cyclicals have the greatest percentage of stocks above their 50-day moving averages and are the sectors with the best relative strength, outperforming the traditional higher beta leaders such as communications, tech, and discretionary. Checking sectors, cyclicals led again Tuesday with materials and healthcare both up more than 2 % and industrials close behind.

7:05Infotech made light gains with memory chip firm Micron a standout again, posting a double-digit rally. Qualcomm also rose 3 % as investors appeared enthused about its presentation at the CES Tech Conference, where it unveiled a new chip and an expanded automotive collaboration with Google. Another tech stock on the move was Palantir, which rose 3%. Strong performance also came from memory chips companies other than Micron, including Western Digital and Seagate Technology. Some of the buying in tech appeared to be a reversal of the rotation away from it that dominated much of the fourth quarter.

7:43Materials again received support from miners as metals futures had another strong day. In sum, buying was broad across Wall Street Tuesday, and nine of 11 sectors gained. Volume was higher than average, reversing last week's action where stocks fell amid low volume. Despite the overall tech rally, AI leaders NVIDIA and advanced micro devices both lost ground. CEOs of both firms touted advances in AI at the CES conference early this week, with NVIDIA saying its new Vera Rubin chips are in full production. NVIDIA CEO Jensen Huang also provided more details on the company's self-driving car technology and program.

8:25In another development, Bloomberg reported strong demand in China for NVIDIA's H200 chip. Tesla fell sharply around 4 % Tuesday after NVIDIA's autonomous driving announcement. Shares of OneStream, a financial software maker, rose more than 28 % Tuesday on a Reuters report that buyout firm HG Capital has agreed to acquire the firm in an all-cash deal worth$6.4 billion. Vistra climbed more than 3.5 % Tuesday after the electricity and power generation company said it planned to buy Congentrix Energy from Quantum Capital Group in a deal valued at about$4 billion, including cash, equity, and debt, Barron's reported.

9:14American International Group fell 7.4 percent. A news its CEO will step down in June. Microchip technology rose nearly 12 percent Tuesday after the company raised its sales guidance for the recently ended quarter. Ford climbed 2.4 percent Tuesday after the automaker announced 6 % U.S. vehicle sales growth in 2025, bringing its market share to 13.2%. The company enjoyed its best annual U.S. vehicle sales since 2019 last year at$2.2 million. Strengthen Hybrid Truck and the F-Series were highlights, and Ford, in a press release, touted the success of its strategy to appeal to a broad customer base.

10:02The Dow Jones Industrial Average added 484.90 points Tuesday, or 0.99%, to 49 ,462.08. The S &P 500 Index climbed 42.77 points, or 0.62%, to 6 ,944.82. and the Nasdaq Composite increased 151.35 points or 0.65 % to 23 ,547.17. This has been the Schwab Market Update Podcast. To stay informed, visit schwab.com slash market update or follow for free in your favorite podcasting app. And if you like what you've heard, please consider leaving us a rating or review. It really helps new listeners find the show. Join us for another update tomorrow.

11:02For important disclosures, see the show notes and schwab.com slash marketupdatepodcast.