Stocks at 3-Month Lows Awaiting PCE, Job Openings

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.

0:19I'm Colette O 'Claire, and here is Schwab's early look at the markets for Friday, March 13th. Today's a bit like Wednesday, offering some early and critical data that might temporarily redirect investors' attention from overseas strife. The readings come after another dismal session yesterday, where major indexes fell to three-month lows as crude oil kept climbing and the war showed signs of persistence. January's Personal Consumption Expenditures, or PCE Price Index, at 8.30 a.m. ET and the January Job Openings and Labor Turnover Surveyor JOLTS soon after the open provide a double feature on the economy heading into next week's Federal Reserve meeting.

1:05Depending on overnight events in the Middle East and the numbers themselves, These reports could have a market impact or may simply go by with little notice on Wall Street. Almost none of this week's data capture readings taken after the war, meaning much could be discounted. One exception is today's March preliminary consumer sentiment data from the University of Michigan due at 10 a.m. Eastern Time. Sentiment has been weak for months. The lore in its higher gas prices might indicate more gloom in the future, which might show up in this report compiled just after the conflict began. Analysts expect a drop to 55 % for headline sentiment from 56.6 % a month ago.

1:48Long-term inflation expectations were 3.3 % in February, and any uptick there might indicate worsening sentiment around prices as gas began to climb. Leaving data for a moment, crude and the war remained front and center after global prices hit merely$100 per barrel Thursday. This came as Iran's Supreme Leader vowed to keep the Strait of Hormuz blocked and several oil tankers were attacked in Iraq. Millions of barrels of oil being released by the U.S. and other countries can only make up part of the flow that's tied up in the Persian Gulf, Inalus said, and crude may have to climb well above$100 to slow demand.

2:31Unfortunately, demand slowing due to higher prices is what often happens in a recession, though the U.S. economy is less dependent on oil than in the past. Crude is a fungible commodity, meaning U.S. prices aren't protected from global trends. The U.S. still imports a good deal of gasoline each day, for instance. Perhaps with that in mind, the Trump administration on Thursday said it plans to issue temporary waivers for a century-old maritime law called the Jones Act that requires American-built ships be used to transport goods between U.S. ports. The waivers would last 30 days and allow foreign tankers to help supply refiners on the East Coast with fuel from the Gulf Coast, Bloomberg reported.

3:18As crude rose this week, U.S. Treasury note yields marched higher on inflation concerns, a correlation that might not last because higher crude oil prices historically put pressure on the U.S. economy. Eventually, high oil prices are negative for growth, said Kathy Jones, chief fixed-income strategist at the Schwab Center for Financial Research for Skiffer. The 10-year Treasury note yield hit 4.25 % Thursday for the first time in more than a month and topped 4.27 % at times. The January peak was just above 4.31%, a level to watch today. Shorter-term two-year and five-year note yields climbed dramatically Thursday, 13 basis points each, amid worries a longer conflict could delay rate cuts.

4:09The CME FedWatch tool now shows the futures market only anticipating a single rate cut this year, and likely not until autumn. The treachery market continues to pay close attention to the oil market and the potential spillover effects for inflation, said Cooper Howard, director of fixed income researching strategy at Skiffer. The longer the situation in the Middle East lasts, the greater likelihood that oil will remain elevated and raise inflation. This likely puts a floor on how much lower longer-term rates can go. Returning to data, today's VCE could show monthly 0.3 % headline growth and 0.4 % for Core, compared with 0.4 % for both in December, according to briefing.com consensus.

5:00Core excludes volatile energy and food costs. Jolts will likely be closely watched after jobs broke in February fell 92 ,000. Consensus is 6.7 million, up slightly from 6.54 million in December. Generally, job openings have tracked downward over the past few years from post-pandemic peaks above 10 million. In data yesterday, January housing starts and building permits came in mixed, with permits dropping more than 5 % annually and starts up more than 7%. Starts beat the briefing.com consensus figure, but permits, a measure more aligned with future demand, missed the average estimate. Initial weekly jobless claims stayed near record lows at 213 ,000, possible evidence that layoffs remain light despite AI and war fears.

5:57Continuing jobless claims fell$21 ,000 from the prior week with a potential sign of hiring or of people giving up their job searches. The U.S. dollar continued its resilience despite higher oil and weaker U.S. equities. It traded at 99.70 late in Thursday's session, the highest level of the year and the strongest price since late November. It last topped 100 on November 25th. The U.S., with its large domestic energy supplies, has some insulation from rising crude and natural gas prices. This is a huge reason that we've seen the U.S. dollar rise so much over the past week, said Kevin Gordon, head of macro research and strategy at Skiffer.

6:43In any event of geopolitical instability, investors tend to flock to the dollar, and they view it as this perceived haven currency. And that's even truer today. Adobe shares lost 5 % initially in post-market trading, despite the software giant reporting better-than-expected quarterly earnings and revenue and issued guidance that topped Wall Street's consensus. The company also reported that its CEO of 18 years plans to transition from his position once his successor has been appointed. This could be why the stock dipped. In other corporate news, Monday marks the start of NVIDIA's GPU Tech Conference, or GTC, with a speech by CEO Jensen Huang scheduled for 2 p.m.

7:32ET that day. On Thursday, major indexes fell sharply, and many closed near their lows. That's a weak signal, technically, and so has the S &P 500's dropped below 6 ,700. Another negative sign was the S &P's failure to spend any time at all yesterday above Wednesday's low point and the lack of dip buyers late in the session. The S &P 500's close was its lowest this year, and the index is now down 2.5 % year-to-date. Yesterday's close was the weakest for the S &P 500 since November 21, more than three months ago, and now the November closing low of 6 ,538 could be a level to watch. The 200-day moving average of 6 ,600 is above that and may be the first point of support on another descent.

8:26The S &P 500 hasn't closed below its 200-day moving average since last May. Eight of 11 S &P 500 sectors fell yesterday, with only energy and the defensive utilities and stable sectors up. Industrials finished last, right behind financials and consumer discretionary, as economic growth worries intensified and Goldman Sachs cut its expected U.S. gross domestic product or GDP forecast by 0.3 percentage points. In individual trading Thursday, Morgan Stanley fell 4 % after Bloomberg reported the firm is limiting redemptions on a private credit fund. Morgan Stanley's North Haven Private Income Fund, which has almost$8 billion in assets, returned around$169 million for less than half of investors' tendered requests after capping redemptions at 5 % of shares, Bloomberg said.

9:28Financial stocks cratered Thursday on the same private credit worries, falling more than 1.5 % as a sector. Consumer stocks, including airlines, cruise lines, personal luxury item sellers, and automakers, suffered sharp losses Thursday amid economic worries. The chip sector, which had been buoyant earlier this week, lost its footing and fell more than 3%. Transport stocks fell about the same. Dollar General fell 6%, despite earnings that topped consensus and revenue that matched consensus views. Guidance also was in line with expectations. Shares were up sharply since late last year, heading into the report.

10:11Dow climbed 9 % Thursday, and other chemical companies also rose, as the war drove up prices for fertilizer components making chemicals, Barron's reported. The Dow Jones Industrial Average cratered 739.42 points Thursday, or 1.56%, to 46 ,677.85. The S &P 500 index plunged 103.18 points for 1.52 % to 6 ,672.62, and the Nasdaq Composite gave back 404.15 points for 1.78 % to 22 ,311.98. 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.

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