Salesforce, Macy's, Crypto, and ADP Jobs in Focus

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 Keith Lansford, and here is Schwab's early look at the markets for Wednesday, December 3rd. Investors start the day awaiting jobs and services sector data while perusing the latest tech earnings. Tuesday featured light gains for the broader market, led by strength in tech and crypto, as risk sentiment improved. Still, Wall Street's advance was relatively narrow, and the S &P 500 index remained below last week's close, raising questions about how much conviction rallies may have so close to all-time highs.

0:49Marvell Technology and CrowdStrike reported after the close yesterday, providing the latest look at AI and cybersecurity trends. Marvell's numbers roughly matched consensus, but guidance came in about as expected, while data center revenue growth of 38 % beat the company's own forecast. Also, Marvell announced the acquisition of Celestial AI, which it said, quote, expands our leadership in AI connectivity, end quote. Shares fell sharply in post-market trading after the earnings and acquisition news. CrowdStrike's results and guidance were about as analysts had expected, and shares were choppy in post-market trading despite a 22 % year-over-year revenue rise.

1:31Salesforce reports after today's closing bell, it's been a tough year for the company's shares, weighed down by concerns that software faces AI competition. However, revenue climbed 10 % in the quarter it reported three months ago, and Salesforce maintained its full-year revenue outlook then while raising earnings guidance. This time, investors will likely watch performance of the company's AgentForce AI software for signs of Salesforce getting traction from its AI offerings. Other earnings to watch include retailers Dollar Tree and Macy's before the open, along with enterprise software firm Snowflake after the close.

2:13There's also a fair share of data today, including ADP employment due at 8.15 a.m. Eastern Time. It's expected to show November jobs growth of just 10 ,000, down from 42 ,000 in October. While weakness is pretty much dialed in, any sign of significant unexpected strength could set off more discussion about the Federal Reserve decision next week. Chances of a rate cut were 89 % as of late Tuesday, according to the CME FedWatch tool, and at this point, it would be surprising if the Fed didn't deliver what the market expects. Keep in mind, however, the ADP report isn't necessarily correlated with official government jobs data due December 16th, as it only tracks private sector employment.

2:58More jobs data is due tomorrow morning with the November Challenger job cuts report after a sharp rise in October layoffs. Consensus is for just under 100 ,000, down from 153 ,000 in October. Thursday features weekly jobless claims, too, with briefing.com consensus at 220 ,000 near the low end of the recent range. Despite what appears to be a lackluster jobs climate, holiday shoppers seem resilient. Cyber Monday sales grew 4.5 % versus last year from midnight to 6.30 p.m. Eastern Time Monday, according to Adobe Analytics. Black Friday sales also looked solid, the National Retail Federation said.

3:42November retail sales are due December 17th, but investors won't likely hear directly from most major retailers until early next year on their fourth quarter earnings calls. Macy's earnings call today and Costco's earnings next week are two of the last opportunities this year to get the retailer's eye view on shopping trends. The so-called wealth effect, driven partly by rising stock prices and by cryptocurrency, comes into question when scrutinizing holiday shopping this year. Bitcoin made a sharp turnaround on Tuesday to climb 6 % after falling 5 % the day before. Still, it's down almost 30 % from its October peak, and there's a chance that could make some consumers hesitant to spend big on shopping trips.

4:31The 10-year Treasury note yield, meanwhile, has been stuck in a range for weeks between 4 % to 4.15%. It slipped below 4.1 % Tuesday, though the real test might come this morning. Today's 10 a.m. November ISM services report follows October data that showed a jump in the prices paid component to 70%. That was the first reading above 70 % since October of 2022 and raised inflation concerns. Another reading that high, combined with Monday's rising prices in the ISM manufacturing report, might reinforce inflation fears as the Fed prepares to meet next week. One reason Treasury yields advanced Monday was concern about a possible Bank of Japan rate hike later this month.

5:17This also drove the yen higher versus the dollar and appeared to be among the main pressure points on cryptocurrencies early this week. Though Bitcoin reversed sharply on Tuesday, that doesn't mean the issue has disappeared. As Japanese yields rise, foreign investors may diversify out of Treasuries if they can get attractive yields elsewhere, said Colin Martin. head of fixed income research and strategy at the Schwab Center for Financial Research, noting that Japanese yields are the highest since 2008. The SIBO Volatility Index, or VIX, flagged to below 17 yesterday, but the market remains in contango.

5:55VIX contracts for later this month and beyond rise above 20, the historic average, perhaps hinting at geopolitical and rate worries into 2026. Technically, an important chart point remains 6 ,770, while resistance likely rests near the all-time high of 6 ,920 for the S &P 500 index. The index has traded in a range between roughly 6 ,550 and 6 ,900 since mid-September and recently clawed back above its 100-day and 20-day moving averages. Despite Wall Street's moderate gains Tuesday, the sector landscape didn't impress. Just three of 11 S &P sectors rose, with recent leaders like energy, utilities, and materials finishing deep in the red.

6:46While industrials led on strength from Boeing, Infotech and communication services were in the mix, placing second and third in the daily scorecard. This doesn't advance the broadening breadth scenario many bullish investors like to see, but it was just one day. Only 52 % of S &P 500 stocks trade above their 50-day moving averages, though the S &P 500 is up nearly 5 % from the recent November 20th low. This suggests breadth remains relatively narrow. That said, the Relative Strength Index, or RSI, has climbed from 31 to 57 for the S &P 500 index over that time frame, going from near oversold conditions to back where it was in early November before stocks stumbled that month.

7:33Checking individual stocks Tuesday, Boeing soared 10 % after the company said it expects positive free cash flow in 2026 and higher 737 and 787 deliveries. GE Vernova and Caterpillar also performed well to help industrials lead the sector race, but neither had any big news associated with them. Strength may reflect enthusiasm over the economy, possibly related to ideas of lower rates as well as positive seasonal factors. Stocks related to chips and AI were mixed, with Broadcom and advanced microdevices pulling back, while ASML, Apple 11, Marvell, and Taiwan Semiconductor had positive sessions.

8:16NVIDIA put together its first back-to-back gains in almost a month, but remains well below October's all-time highs. Apple and Walmart both set new all-time highs Tuesday, possibly helped by strong shopping trends so far this holiday season. Airlines, including United Airlines and Delta Airlines, climbed 2-3 percent after what the U.S. government said was the busiest Sunday after Thanksgiving ever in terms of travelers passing through airport checkpoints. Warner Brothers Discovery rose 2.7 percent after the Wall Street Journal reported that Netflix has sweetened its offer for the company, while Paramount Skydance and Comcast have submitted second bids, Barron said.

9:02And shares of Symbotic, a robotics warehouse automation company, fell 21 percent after getting downgraded by Goldman Sachs to sell from neutral.

9:15The Dow Jones Industrial Average added 185.13 points Tuesday, or 0.39%, to 47 ,474.46. The S &P 500 Index climbed 16.74 points, or 0.25%, to 6 ,829.37. and the NASDAQ composite tacked on 137.75 points or 0.59 % to 23 ,413.67. 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.

10:15For important disclosures, see the show notes and schwab.com slash market update podcast.