In short
Market rebound after Friday’s sell-off; S&P 500 breaks losing streak; drivers include M&A news, mega-cap gains, economic data, Fed leadership expectations, credit-spread widening, shifting options sentiment, and copper-to-gold tariff signals.
Guests
No guests mentioned; this is a Schwab Market Update narrated by Colette O’Claire. Fixed-income commentary by Colin Martin (Director of Fixed Income Strategy, Schwab Center for Financial Research).
Key claims
Credit spreads jumped 23 points (still low at 3.01%), implying limited risk premium; options sentiment flipped from bullish (over 90% calls in July) to more hedged (30-day volatility skew to 71st percentile), suggesting sentiment may be turning.
Notable examples
Blade Air Mobility +17% on Joby Aviation acquisition report; ComScope +86% on $10.5B Amphenol sale; Steelcase +6% on HNI buy news; copper futures -28% on tariffs; IDEX Labs +27.5% forecast raise; Spotify +5% premium price increase; Tyson Foods +2.44% outlook raise.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOMarket Recovery Overview
0:45 to 1:40
An overview of how M&A activity helped stocks recover from a sell-off.
“Steelcase shot nearly 6 % higher on news that HNI will buy the company.”
Major Stock Movements
1:40 to 2:59
Discussion on significant stock movements and their implications.
“Bloomberg reported that President Trump will announce a new Federal Reserve governor to replace Adriana Kugler, who last week announced plans to retire on August 8.”
Economic Indicators and Sentiment
2:59 to 4:26
Analyzing factory orders and credit spreads as economic indicators.
“The options markets have been sending some interesting signals the last few weeks.”
Copper and Gold Market Dynamics
4:26 to 5:20
Explaining the copper-to-gold ratio and its relevance to economic health.
“Copper tariffs have distorted the copper-to-gold ratio, but the recent sell-off in copper suggests economic weakness.”
Recent Market Performance
5:20 to 5:52
A recap of the recent performance of major stock indices.
“The Dow Jones Industrial Average rose 585.06 points Monday or 1.34 percent to 44 ,173.64.”
Transcript
Automatic transcript. May contain errors.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.
0:18I'm Colette O 'Claire, and here is Schwab's early look at the markets for Tuesday, August 5th. M &A Monday helped stocks bounce back from Friday's sell-off. Blade Air Mobility rallied 17 % on a Bloomberg report that Joby Aviation was looking to acquire the helicopter rideshare company. Joby Aviation rose 18.82%. ComScope rocketed 86 % on news that it had reached a cash deal to sell its broadband connectivity division for$10.5 billion to Amphenol. Amphenol rose 4.14%. Steelcase shot nearly 6 % higher on news that HNI will buy the company. HNI fell 10.4%. MegaCap stocks were also big drivers, with NVIDIA up 3.62%, META up 3.51%, Alphabet up 3.05%, Microsoft up 2.20%, and Tesla up 2.19%.
1:19June factory orders fell 4.8 % month over month, which is a smaller drop than the consensus estimate of minus 5.1%. May saw an upward revision of 8.3 % from 8.2%. When transportation is excluded, factory orders actually increased 0.4%. Bloomberg reported that President Trump will announce a new Federal Reserve governor to replace Adriana Kugler, who last week announced plans to retire on August 8. Kugler's term was scheduled to end in January, but she didn't provide a reason for the early departure. The opening provides an opportunity for President Trump to offer a nominee that could potentially replace Jerome Powell as the Fed chair.
2:05Credit spreads rose after Friday's non-farm payrolls revision. They measure the difference between yields on Treasury and high-yield bonds, which is used as an investor sentiment indicator where a widening spread is bearish and a falling spread is bullish. The average spread of the Bloomberg U.S. Corporate High-Yield Bond Index rose 23 points, the largest one-day spike since April. The one-day rise was large, but the level is still relatively low. At just 3.01 percent, the average spread of the index is still well below its long-term average, not representing much risk premium in case the economy slows, observed Colin Martin, director of fixed income strategy at the Schwab Center for Financial Research.
2:49High-yield bonds would likely become more attractive if spreads rose to the 4.5 to 5 percent area or higher. The options markets have been sending some interesting signals the last few weeks. In July, S &P 500 index options reached over 90 percent calls, showing heavy bullish bias. While not as high, similar trends are seen in ETF and equity options. Additionally, up until last Friday, hedging was at a minimum with 30-day volatility skews in the 45th percentile. Some contrarian investors saw these developments as signs that the market was in an extreme overbought condition and ripe for a pullback.
3:32On Friday, option activity flipped and hedging ramped up, causing the 30-day volatility skews to move to the 71st percentile. These changes suggest that investor sentiment may be flipping. Last week, copper futures fell 28 % on tariff news, which also caused the copper-to-gold ratio to plummet. This ratio is used by investors to measure economic health. A rising ratio is seen as positive for the economy, while a falling ratio is negative. The reason is because copper is used in manufacturing and construction, particularly in wiring. When copper is in high demand, manufacturing and construction is doing well.
4:13On the other hand, gold is seen as a hedge or safe haven by many investors. If gold is outperforming copper, it suggests that investors are bearish on the economy and looking for safety. Copper tariffs have distorted the copper-to-gold ratio, but the recent sell-off in copper suggests economic weakness.
4:36IDEX Labs rocketed 27.5 percent higher as the pet healthcare company reported better-than-expected earnings and raised their 2025 profit and revenue forecasts. Monolithic Power extended its Friday rally another 5.73 percent, bringing it to a total increase of more than 16.7 percent. Spotify rallied 5 percent after announcing plans to raise its premium subscription prices in September. Tyson Foods rose 2.44 percent after beating earnings and revenue estimates and raising its 2025 fiscal year outlook. Williams-Sonoma climbed 6.85 percent despite no immediate news. The Dow Jones Industrial Average rose 585.06 points Monday or 1.34 percent to 44 ,173.64.
5:30The S &P 500 index rallied 91.93 points, or 1.47%, to 6 ,329.94, and the NASDAQ composite climbed 403.45 points, or 1.95%, to 21 ,053.58. 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.
6:16For important disclosures, see the show notes and schwab.com slash market update podcast.
From the publisher
Stocks bounced back on Monday with leadership from mega-cap stocks and some merger and acquisition news. However, a couple secular indicators are flashing warning signs.
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