Oil, Yields in Focus with Job Openings, Dell Next

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, September 1st. Focus returned to crude oil and the Middle East early this week after a fresh round of skirmishes between Iran and the U.S. and new threats Monday by President Trump. Today could shift attention towards jobs data and tech earnings. Crude oil rose sharply Monday, weighing on stocks to start the week, and that correlated closely with another climb in Treasury yields. The two have moved in tandem for months, with rising yields also reflecting heavier chances for a September rate hike after Federal Reserve Chairman Kevin Warsh's hawkish Friday speech.

0:58The jobs data parade starts with today's 10 a.m. Eastern Time July Job Openings and Labor Turnover Survey, or JOLTS, which analysts expect to show 7.3 million job openings. Such a number, down just slightly from June's 7.36 million, probably won't mean much for the market. Instead, traders might focus on the quits rate, which provides clues about how many workers are jumping to new jobs, possibly for better pay. A higher quit rate than July's 2 % might send a positive signal about the job market ahead of Friday's August non-farm payrolls report, the crucial reading this week. Quits are near their lowest level in six years.

1:41Looking ahead to payrolls data Friday, analysts expect around 45 ,000 to 55 ,000 new jobs created in August, up from a decline of 23 ,000 in July. The non-farm payrolls report have been weak recently, and if Friday's report is soft, this could ease rate hike concerns and translate into a bullish move for stocks, said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. That said, the Fed still faces a new round of August inflation data next week after July's Personal Consumption Expenditures, or PCE, prices report showed headline annual inflation of 3.7%, well above the Fed's 2 % goal.

2:26Warsh, in his Jackson Hole speech, appeared unimpressed by cooler recent monthly inflation growth. As of late Monday, rate hike odds for this month's Fed meeting stood at 66%, compared with around 60 % Friday and 41 % a week ago. Odds reached 90 % of at least one rate hike in 2026, and 41 % of two, the CME FedWatch tool showed. A two-year note yield was unchanged Monday, but climbed six basis points in August to 4.35%. And it's more sensitive to near-term rate moves than the 10-year yield, which climbed one basis point to 4.76 % in August, making the yield curve flatter than a month ago. A flatter yield curve can indicate weaker economic conditions ahead.

3:14Recent Treasury note softness. Treasuries move the opposite direction of yields corresponded with weakness in the Japanese yen that added to concerns Japan might take more steps to protect its currency. Doing so could mean higher U.S. Treasury yields. On Monday, U.S. Treasury Secretary Scott Besson said he expects Japan to defend the yen, Reuters reported. Besson helped engineer last month's combined effort by Japan and the U.S. to support the yen. It's unclear how much impact a Fed rate hike or two might have on U.S. corporate growth, which has strained the reins for several quarters in terms of earnings.

3:53AI-related spending hasn't slowed, and it's helping companies outside of tech, including financials and industrials.

4:04Tech earnings take center stage this week. The key comes Wednesday afternoon when chip giant Broadcom and cloud-based AI firm Snowflake report. Before that, this afternoon brings cybersecurity firm Palo Alto Networks and server maker Dell. Palo Alto follows a strong report from competitor CrowdStrike last week, just as Broadcom reports in the wake of NVIDIA's recent solid outing. This could lift the bar for these two and provide meaningful insight on both overall AI and software trends. Investors may be asking if NVIDIA's results reflect broad-based AI strength or simply its own metrics, with Broadcom's results looked to for evidence one way or the other.

4:54The same could go for Palo Alto with cybersecurity. In other data today, the August ISM Manufacturing Index is due at 10 a.m. ET and expected to come in at a headline of 55.3%, according to briefing.com consensus. Anything above 50 % indicates expansion. Major indexes slid Monday, with the S &P 500 index falling for the third session in four, but losses were restrained partly by resilience in chips, including NVIDIA. This could reflect last week's strong NVIDIA results and anticipation of Broadcom on Wednesday. Despite Monday's struggles, the three major indexes advanced in August. These were the first monthly gains for the S &P 500 index and NASDAQ since May.

5:44Only two of 11 S &P 500 sectors rose Monday, the second session in the last three to see very weak positive sector breadth. Energy added 2 % thanks to oil, and Infotech was bolstered by chips. Everything else declined, with cyclical and defensive areas suffering roughly the same. Communication services was notably weak as Alphabet and Meta lost ground amid AI spending concerns amid rising yields. Technically, the S &P 500 index remained above its 50-day moving average near 7 ,567. Recent lows near 7 ,640 didn't get tested Monday. But from a breadth percentage, there's been a major break as just under 50 percent of S &P 500 stocks now trade above their 50-day moving average, down from more than 70 percent at the August peak.

6:41Checking individual movers Monday, Halliburton, Chevron and ExxonMobil all rose 1.8 percent or more. They drew support from rising oil and possibly from President Trump saying the U.S. and Venezuela have agreed for the U.S. to secure control of 65 billion barrels of oil reserves in Venezuela. Aon dropped 9 % as the company agreed to buy USI Insurance Services for$17 billion. The purchase was funded with new debt and Aon expects it to be accretive to adjusted earnings per share in 2028. Consumer stocks retreated, partly in response to rising treasury yields that make borrowing tougher for consumers.

7:24Clothing retailers, airlines, cruise lines, and rideshare firms all fell moderately, with a gap down 5 % after last week's earnings-related rally. Software had a solid day, led by CrowdStrike's 5 % gains in the wake of its solid results last week and its announcement of a new collaboration with Snowflake on AI-native security and enterprise data. Salesforce and ServiceNow also rose. Crypto-related stocks gained thanks to a strong day for Bitcoin, which remained near recent highs at just below$80 ,000. Tesla rose 5.5 % as shares clawed above their 50-day moving average, a positive technical move.

8:08CEO Elon Musk contributed to the positivity with comments about a move toward aggressive solar energy production, Briefing.com noted. PG &E plunged 20 % after California's state legislature introduced wildfire legislation without protection from liabilities for utilities, Barron's reported. Several Wall Street firms downgraded shares. And Deere climbed almost 4 % after getting upgraded to outperform from neutral by Baird. The firm says Deere is the cleanest setup in the sector, given its high exposure to North America row crop equipment demand. The Dow Jones Industrial Average tumbled 374.09 points, or 0.70%, Monday, to 53 ,185.90, the S &P 500 index retreated 25.62 points or 0.33 % to 7 ,686.14, and the Nasdaq Composite dropped 31.53 points or 0.12 % to 26 ,370.89.

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9:48For important disclosures, see the show notes and schwab.com slash market update podcast.