Markets Hit Highs As Inflation, GDP Data Loom

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 Wednesday, May 27th. With the S &P 500 and Nasdaq Composite climbing to fresh record highs on renewed AI optimism and hopes for a U.S.-Iran deal, investors are turning their focus to a series of economic reports later this week that could test the market's momentum. Thursday's Personal consumption expenditures price index and revised first quarter gross domestic product reports will likely be the biggest catalyst for the markets, although jobless claims and durable goods orders data will be closely tracked as well. Earnings from Marvell Technology, Salesforce, and Snowflake today will also be critical as investors look for another read on AI demand and software spending trends, while a raft of Federal Reserve speakers will draw attention throughout the week.

1:09For investors, the key question is whether this incoming data and Fed commentary will support the current rally or revive concerns about inflation and the potential for rising interest rates. Markets got a boost on Tuesday after President Trump said the talks with Iran were proceeding nicely on Memorial Day, lifting hopes for a U.S.-Iran deal that could reopen the Strait of Hormuz. International benchmark Brent crude oil prices slipped 4 % amid the optimism, even as the U.S. conducted what it called self-defense strikes in southern Iran. Markets have repeatedly rallied on hopes for a diplomatic resolution to the conflict in the Middle East, but if diplomacy breaks down, it could weigh on this headline-driven and highly valued market.

1:57Oil will likely be a key factor moving forward as investors look ahead to Friday inflation data. Crude prices remain well above pre-conflict levels, meaning energy prices may continue to feed into the Fed's favorite inflation gauge and could pressure the central bank to lift rates. Still, the futures market priced in at 52.8 percent odds of a rate hike by year-end on Tuesday afternoon, according to the CME FedWatch tool. That was down from the nearly 70 percent odds seen on Friday. Treasury yields also fell slightly across most of the curve on Tuesday, bucking the recent trend as memory chip and tech stocks lifted the broader equity market.

2:41On the earnings front, the Chinese online retail giant PDD Holdings will draw attention this morning. PDD has struggled this year amid increased regulatory scrutiny, tariff issues, and domestic competition, mirroring the broader Chinese market. China is a strong contender for AI leadership, but it isn't helping its stock market, said Michelle Gibley, director of international equity research and strategy at the Schwab Center for Financial Research. There have been a narrow group of AI-related companies that have posted strong gains, but the broader stock decline has been driven by downward revisions to earnings amid continued pressure on profit margins.

3:22Investors will also monitor earnings from Bank of Montreal and Bank of Nova Scotia before the bell. Then, after the close, the semiconductor company Marvell Technology, along with software players including Salesforce, Synopsys and Snowflake, will be in focus. While the software sector has slowly begun to recover from an extended sell-off driven by fears of AI disruption, the recovery remains uneven. Some software leaders, like ServiceNow, have mounted comebacks over the past month after posting strong earnings, while others have struggled. Earnings from Bellwether Salesforce today will be critical.

4:01If the enterprise software giant can top earnings estimates and demonstrate its ability to profit from its AI offerings, it could help lift investor sentiment sector-wide. With no major economic reports due today, investors will likely shift their focus to the packed calendar of Fed speakers as they await inflation and GDP data later this week. Dallas Fed President Lori Logan is set to speak before market open, while Federal Reserve Governor Lisa Cook and Federal Reserve Vice Chair Philip Jefferson will make comments after the bow. Investors will be looking to see how Logan, Cook, and Jefferson are thinking about rising inflationary pressures after recent hawkish statements from some of their colleagues in recent weeks.

4:46In Economic Data Tuesday, the S &P cotality Case-Shiller Home Price Index fell 0.2 % month-over-month on a seasonally adjusted basis in March, in a sign that elevated mortgage rates continued to weigh on the housing market. It was the 10th consecutive month that inflation outpaced national home price appreciation. Tomorrow's new home sales data will be in the spotlight after the underwhelming price data. The Conference Board also revealed yesterday that its Consumer Confidence Index fell 0.7 points to 93.1 in May as consumers felt the pinch of rising prices due to the conflict in the Middle East.

5:25This followed the University of Michigan's Consumer Sentiment Index heading an all-time low last week. However, despite consumers' lingering concerns about inflation and the conflict in the Middle East, market volatility remained relatively muted on Tuesday. The SIBO Volatility Index, or VIX, rose 2.1 percent to 16.94, well below the levels above 30 seen in late March. Looking at individual market movers Tuesday, Micron technology surged 19.3 % after UBS upgraded its price target for the memory maker, projecting 100 % upside potential. Skyrocketing high-bandwidth memory prices amid the AI boom have led Micron's stock to soar over 1 ,200 % since April of 2025, leaving it with a market cap near$1 trillion.

6:17dollars, but Wall Street largely remains bullish despite the massive rally. Qualcomm shares also jumped 4.5 percent after the company reached a deal with TikTok owner ByteDance to supply chips for its AI data centers, Bloomberg reported, citing people familiar with the matter. Meanwhile, British Petroleum stock sank 3.9 percent after the company removed Chairman Albert Manifold less than eight months after he took the role due to serious concerns about governance, oversight, and conduct issues. AutoZone shares also plummeted 9 % after the company missed Wall Street's first quarter revenue estimates amid faltering international growth.

7:00Overall, 7 out of 11 S &P 500 sectors ended Tuesday in the green. Infotech set the pace as memory makers soared while energy and consumer staples lagged. The Dow Jones Industrial Average lost 118.02 points Tuesday, or 0.23%, to 50 ,461.68. The S &P 500 Index gained 45.66 points, or 0.61%, to 7 ,519.12. And the Nasdaq Composite jumped 312.21 points, or 1.19%, to 26 ,656.18. This has been the Schwab Market Update podcast. To stay informed, visit www.schwab.com slash marketupdate 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.

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