Weekend Talks, Netflix in Focus After Record Highs

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.

0:18i'm colette o 'clair and here is schwab's early look at the markets for friday april 17th today brings a break from the frenzied earnings pace earlier this week there's nothing in terms of data and company reports are light instead investors might focus on the war and on a sharp drop in netflix shares after the streaming firm reported late thursday key names like tesla American Express, and UnitedHealth Group report next week, along with companies in the defense sector, as war in the Middle East stays in headlines. Data is on the light side, however, and the Federal Reserve enters its quiet period ahead of the April 29th rape decision.

1:02Stocks climbed again Thursday, but at a more relaxed pace, following a frenzied two-week rally that's lifted the S &P 500 index about 10 percent from its late-March low, and the Nasdaq composite around 14 percent. Both posted new all-time highs for the second day in a row. War news was a mixed bag, with Bloomberg reporting that European and Gulf officials said a peace deal could take six months, while President Trump, countered by telling media that talks with Iran would soon resume, and a deal is close, but he's ready to go back to fighting if there's no deal. Meanwhile, Israel and Lebanon, along with Hezbollah, announced a ceasefire Thursday, briefly lifting stocks.

1:49This may have been baked into the market earlier in the week because the news-related pop soon dissipated. Instead, focus turned to crude oil, which rose more than 2 percent to back above$93 per barrel by late Thursday. This put pressure on Treasuries, and the 10-year note yield, which moves the opposite direction, clawed above 4.3 percent. Strong economic data so far this week, including initial weekly jobless claims of just 207 ,000 added to Treasury losses. April's Wall Street rally after a rough march is far from unprecedented, as seasonal sentiment tends to improve as spring advances. Last year, the post-tariff rally that began in mid-April powered through much of the summer.

2:38A repeat is never guaranteed, and traditionally, summer is a quieter time for markets. One advantage stocks have now, perhaps, is the recent dip in valuations for the Magnificent Seven, something investors appeared to notice this week with sharp gains for stocks like Apple, Nvidia, and Microsoft, which suffered earlier this year. Earnings from Apple and Microsoft are due later this month. Another advantage is a solid earnings picture so far, though only about 10 % of S &P companies have reported. Strong signals from bank earnings and spending data suggest U.S. consumers maintained muscle despite higher gas prices.

3:18A lower-than-expected wholesale prices reading earlier this week and Thursday's decline in jobless claims may also support this narrative. This also takes some pressure off the Fed and allows policymakers to wait on reeked decisions. That's likely what they prefer, judging from recent speeches. We expect Fed policy to stay on hold for several meetings, with the 10-year Treasury yield likely to remain in the 4 % to 4.5 % range over the short run, said Colin Martin, head of Fixed Income Research and Strategy at the Schwab Center for Financial Research, or SCIFR. If oil prices stay elevated for longer and or inflation expectations rise, yields may rise above that 4.5 % upper threshold.

4:04To monitor inflation expectations, investors might want to keep an eye on next Friday's final April University of Michigan consumer sentiment data, which tracks that metric. Long-term inflation expectations have stayed anchored, to use a Fed term, so any sign of the boat drifting away could raise concerns. A strong dollar is one thing that could blunt inflation, and the dollar soared in March on safe haven buying. Since then, it's steadily fallen and could be another tailwind for U.S. stocks, or at least those with major overseas businesses. A lower dollar makes their products more affordable in foreign markets.

4:43The same thing, however, can also support treasury yields that raise borrowing costs for consumers and companies.

4:53Yesterday's earnings from Taiwan Semiconductor Manufacturing, the largest chipmaker in the world, looked reassuring for chip stocks as the company cited continued strong demand for AI. Shares fell, however, due in part to concerns about higher spending by Taiwan Semiconductor Manufacturing. Netflix reported late Thursday and earnings and revenue surpassed consensus. Earnings per share of$1.23 were far above the$0.76 fact-set average estimate, but second-port evidence disappointed, coming in below the consensus view and sending shares down 8 % initially in post-market trading. Netflix did reaffirm its fiscal year 2026 outlook, however, while announcing that founder Reed Hastings plans to step down from the board in June, which also might have hurt shares.

5:46The Netflix weakness, if it lasts, could set a sour tone today for the broader market, which often moves on Netflix results. Next Tuesday, focus shifts to the Fed, when the Senate Banking Committee holds a confirmation hearing for Kevin Warsh, President Trump's nominee to succeed Fed Chairman Jerome Powell. This comes after new threats by Trump to fire Powell, while North Carolina Senator Tom Tillis restated his pledge not to vote for Warsh until the criminal investigation into Powell is over. In terms of rate policy, recent Fed speakers sounded on the fence and willing to wait. Yesterday, New York Fed President John Williams said inflation remains a concern amid spiking oil prices and warned of a possible supply shock that could raise inflation and hurt economic activity at the same time, Bloomberg reported.

6:39Williams, an influential policymaker, worried about higher oil prices starting to pass through to other areas in a way that could raise the cost of groceries, airline, and fertilizer. He expects headline inflation, which includes food and energy costs, to remain between 2.75 % and 3 % by the end of the year, well above the Fed's 2 % target. As of late Thursday, odds of a pause at this month's Fed meeting were near 100%, which would make April the third straight meeting to keep the target range between 3.5 % and 3.75%. Chances of any rate cut this year stood near 30%, the same level it's been at for a few days, according to the CME FedWatch tool.

7:28Futures trading has removed almost any chance of a rate hike this year. Another Fed-related item to watch for is a possible Supreme Court decision on the case regarding Trump's effort to fire Fed Governor Lisa Cook. Though it's not clear when the court might rule, today is one possibility. A ruling against the president would likely reassure market participants worried about Fed independence.

7:59Technically, stocks are approaching overbought levels as tracked by the S &P 500's Relative Strength Index. This doesn't mean they can't move higher, but investors might be more circumspect. This is a flow-driven, headline-sensitive rally. Momentum is strong, but watch geopolitics, flows, and consumer data for potential shifts. Speaking of flows, they've driven this upward move. Hedge funds flipped to net buyers for the first time in eight weeks, fueling upside momentum. Short covering started the move, as a key part of the rally has been bearish positions getting squeezed, adding fuel to the upside.

8:38Flows have been primarily into financial, discretionary, and tech stocks, which had been laggards most of March. Market breadth, which can help investors gauge the strength of a rally, paused after the recent parabolic increase. Around 50 % of S &P 500 stocks traded above their 50-day moving average as of Thursday. That's sharply higher than last month, but still below the 60-70 % level frequently seen earlier this year, when most sectors charged higher. Even so, major indexes are on track for a third straight weekly gain after five consecutive losing weeks. However, with the market up so much over the last two weeks and another potentially important weekend for peace negotiations ahead, today could see investors back in a more cautious mode.

9:30On Thursday, major indexes inched higher, and the Nasdaq composite posted its longest win streak since 2009 at 12 straight sessions. Breadth, which had narrowed Wednesday when only four S &P 500 sectors climbed, widened Thursday despite lesser overall gains. Seven sectors of 11 sectors rose, led by energy as oil roared back. Infotech posted another solid day of nearly 0.8 percent gains, but discretionary reversed from Thursday on oil concerns, and industrials continued to sag. In individual trading Thursday, Abbott Labs sank 5.5 percent after its earnings. While the company's quarterly results topped earnings and revenue estimates, its second quarter and full-year guidance came in short of consensus on Wall Street.

10:26PepsiCo added 2 percent as quarterly results surpassed Wall Street's expectations and the company reaffirmed guidance for the fiscal year. It sees organic revenue growth of 2 to 4 percent. U.S. food business volume rose for the first time in two years, CNBC noted, after recent price cuts. Live Nation Entertainment added 2.9 percent Thursday after a steep 6 percent drop Wednesday. This came after a jury said the company operated a monopoly in the ticketing market, violating antitrust laws, the New York Times reported. The case was brought by 33 states and Washington, D.C., and Live Nation could be forced to divest and pay damages.

11:12Chip stocks got another lift Thursday from positive sentiment around Taiwan Semiconductors results, sending shares of Intel, Advanced Micro Devices, Super Micro Computer, and SanDisk higher. Dell climbed another 9 % Thursday as several Wall Street analysts raised their price targets on the stock. Goldman was one of them and cited Dell's AI position. Cruise and airline stocks fell Thursday as crude oil prices ticked up.

11:45The Dow Jones Industrial Average notched a gain of 115.00 points Thursday, or 0.24%, to 48 ,578.72. The S &P 500 Index gained 18.33 points, or 0.26%, to 7 ,041.28, and the NASDAQ composite climbed 86.69 points or 0.36 % to 24 ,102.70. 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. It really helps new listeners find the show. Join us for another update Monday.

12:46For important disclosures, see the show notes and schwab.com slash market update podcast.