Thin Data, Earnings Keep Crude, War in Spotlight

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, March 17th. Though the Federal Reserve's meeting starts today, focus likely remains on crude after a slight drop in that closely watched commodity brought buyers back to Wall Street to start the week. Crude fell below$95 per barrel and stocks jumped 1 % yesterday on hopes the U.S. might organize an international coalition to move crude through the Strait of Hormuz. Also, media reports said several ships had traversed the narrow gap over the weekend. Though traffic is mostly at a standstill, keeping as much as 15 million barrels of Gulf oil from reaching the market each day, market participants appeared to welcome any sign of possible progress.

1:04Brent crude, which tracks global prices, still closed above$100 Monday for the third straight day, something that hasn't occurred since 2022. Iran-related geopolitical risk has boosted energy leadership and volatility, while elevated stock and sector-level swings reinforce the importance of diversification, rebalancing, and fundamentals-driven active decision-making, Schwab experts noted in their recent market outlook. The Fed meeting is widely expected to end with no change to rates when a decision gets announced tomorrow afternoon, but could offer intrigue on other issues. These include the central bank's economic projections and its dot plot of future rates.

1:48The meeting could also offer clarity on Chairman Jerome Powell's plans, assuming his term ends on time in May. The timing is for question because Republican Senator Tom Tillis has vowed to block a vote on President Trump's nominee for chairman Kevin Warsh until a criminal investigation of Powell ends. The investigation, related to the Fed's headquarters renovation, appears to face new roadblocks after a federal judge last week denied the administration's request to subpoena Powell, a ruling that's now under appeal. As of late Monday, the CME FedWatch tool showed virtually no chance of a cut at this week's Fed meeting and little chance of a cut before September.

2:32That's the first month where chances approach 50%. The Fed, the European Central Bank, the Bank of England, and the Bank of Japan all meet this week, starting with the Fed decision Wednesday afternoon. Policymakers must simultaneously address energy-driven inflation gains and a dismal U.S. jobs climate. Data to watch before the Fed decision includes Wednesday's February Producer Price Index, or PPI. Though the report was compiled last month and won't reflect any war-related price impacts, it's been an interesting metric lately, showing signs of hotter costs even before oil spiked. PPI due at 8.30 a.m.

3:17ET tomorrow is expected to rise 0.4 % for the core reading, excluding food and energy, down from January's surprising 0.8 % monthly gain. Wholesale prices sometimes can be a canary in the coal mine for consumer prices, indicating higher costs at the wholesale level that might eventually get passed along to customers. Yesterday's industrial production data for February rose 0.2 percent from a month earlier, below the 0.4 percent consensus. However, the market might be in bad news is good news mode, with weaker economic data possibly raising hopes for rate cuts before late this year. That, however, would likely depend on the price of oil and the course of the war, too.

4:02There's a smattering of housing data ahead with pending home sales today, followed by January new home sales on Thursday. Rates for 30-year mortgages hover near 6%, a relatively low level compared with most of the last year. And February existing home sales prices barely rose, according to the National Association of Realtors, which said housing affordability is improving. Following the close today, Lululemon reports. Earnings come amid a proxy battle as founder Chip Wilson tries to change the company's board, news first reported earlier this year by the Wall Street Journal. Last time, Lululemon reported it beat expectations, but its U.S.

4:45business remained under pressure. The U.S. dollar slipped along with crude Monday, and the 10-year Treasury yield fell slightly but remains elevated at 4.22 percent. and yields in the dollar had been climbing amid concerns energy shortages could fuel inflation at home and slower growth abroad. In corporate news, NVIDIA's GPU Tech Conference, or GTC, began Monday with a speech by CEO Jensen Huang. NVIDIA is expected to show multiple hardware innovations, potentially including a new chip for inference, the process of generating results from AI models. Investors might also want to monitor the conference, which continues today, for any updates on war-related impacts on the industry.

5:32Supply chains and costs might be affected by rising oil prices. NVIDIA was up around 2.5 % late Monday when Huang began his keynote speech, but finished up just 1.6 % for the session. Huang said revenue from NVIDIA hardware could total$1 trillion through 2027 as demand climbs thanks to inference. Demand is booming for the company's Blackwell and Vera Rubin chips, he said, according to CNBC. Vera Rubin is expected to debut later this year. NVIDIA also unveiled its NVIDIA GroK 3 language processing unit, CNBC reported. More chip market metrics could be ahead tomorrow afternoon when memory chip giant Micron reports.

6:18Its shares are among the few high flyers lately, helped by rising prices for its products amid a supply shortage. The week began with major indexes rising across the board, led by the tech-heavy Nasdaq Composite's 1.2 % gain. The S &P 500 index clawed back to nearly 6 ,700. This followed settlements at nearly four-month lows Friday, with Magnificent Seven stocks collectively trading back where they were last September. It's been hard to find shelter amid the selling, with energy and software among the few areas showing strength last week. That changed Monday. As the first time in a while, all 11 S &P 500 sectors finished green for the session.

7:04Sectors dominated by Magnificent Seven stocks led the way, with discretionary, infotech, and communication services forming a trifecta as each rose 1 % or more. Defensive areas like utilities and staples trailed cyclical areas that tend to do better in an improving economy. Energy finished second worst among sectors, still well behind the pace of crude oil since the war began. This marked a reverse from before the war when energy shares rose almost from the start of the year, even when oil mostly languished. The sector might be less tied to crude prices now than in the past, as natural gas and downstream firms involved in transport of energy make up a bigger share, CNBC reported.

7:51From a technical angle, the focus remains on the 200-day simple moving average of 22 ,191 for the NASDAQ composite. The index closed under its 200-day average on Friday for the first time since May, a weak sign, before clawing back above it Monday. Continued closes above that level might be viewed as constructive. The S &P 500 index still hovers not far above its 200-day moving average, near 6 ,610, despite yesterday's gains. And Monday's inside session, where the index stayed within the highs and lows from Friday, didn't help matters technically. Bowles wanted Friday's high of 6 ,733 taken out and didn't get it.

8:37Checking market breadth the last two weeks have been devastating. By late Monday, less than 34 % of S &P 500 stocks traded at or above their 50-day moving averages, far below the 59 % that had been the average over the last six months and down from 65 % earlier this month. In Individual Trading Monday, Meta climbed more than 2 % after Reuters reported the company's workforce would shrink 20 % as part of an effort to offset heavy AI spending and as the company grows more efficient due to AI. There's been no date set for job cuts at the company, which employed 79 ,000 people as of December 31. first.

9:19Nebius Group soared 15 percent after it announced a new five-year AI infrastructure supply agreement with Meta to provide$12 billion of dedicated capacity across multiple locations, including one of the first large-scale deployments of the NVIDIA Verirubon platform. Chip stocks advanced with the PHLX Semiconductor Index up 1.8 percent. The move followed a Reuters report that the U.S. Commerce Department has withdrawn a draft rule that would have revised AI chip export controls. Consumer-focused stocks generally performed well Monday and probably remain closely tied to the ups and downs of oil.

10:01Cruise lines, Tesla, and airlines advanced. However, the airline subsector of consumer discretionary is among the worst market performers this year and was down sharply from January highs even before the war began. Bitcoin futures climbed nearly 4 percent to their highest intraday level at nearly$75 ,000 since February 4. Crypto-related stocks gained as well. Homebuilder stocks generally did well Monday as treasury yields eased. Dollar Tree climbed more than 5 percent Monday after reporting better-than-expected earnings and guidance. And major Chinese indexes rose more than 1 % Monday following positive economic data, including a larger-than-expected rise in February industrial production of 6.3 % annually.

10:49Retail sales rose 2.8 % annually, also above expectations.

10:57The Dow Jones Industrial Average added 387.94 points Monday, or 0.83%, to 46 ,000 946.41. The S &P 500 index rose 67.19 points or 1.01 % to 6 ,699.38. And the NASDAQ composite climbed 268.82 points or 1.22 % to 22 ,374.18. 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.

11:55For important disclosures, see the show notes and schwab.com slash market update podcast.