Schwab Market Update
Rally Flags Ahead of Fed Meeting, Nvidia Speech
Published as of: March 18, 2025, 9:14 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® index | 5,675.12 | +36.19 | +0.65% |
| Dow Jones Industrial Average® | 41,841.63 | +353.44 | +0.86% |
| Nasdaq Composite® | 17,808.67 | +54.58 | +0.31% |
| 10-year Treasury yield | 4.33% | +0.03 | -- |
| U.S. Dollar Index | 103.56 | +0.19 | +0.19% |
| Cboe Volatility Index® | 20.82 | +0.31 | +1.5% |
| WTI Crude Oil | $68.47 | +$0.89 | +1.32% |
| Bitcoin | $82,553.61 | -$1,980.67 | -2.34% |
Major index values are as of Monday's close; others are as of 8:45 a.m. ET.
(Tuesday market open) After the first two-day winning streak in nearly a month, stocks took a breather early Tuesday with info tech under pressure as investors awaited tomorrow's Federal Reserve decision. Decent February retail sales data and technical buying helped key yesterday's rally.
Nvidia's (NVDA) GPU Technology Conference (GTC) comes into sharper focus today when CEO Jensen Huang delivers his keynote speech at 1 p.m. ET. Investors will likely listen for anything new about sales of the company's Blackwell platform. Huang might also address anticipated demand from so-called hyperscalers, which has driven so much of the company's recent growth. The question each time Huang talks is whether there's any slowdown.
Industrial production and housing starts are among today's data, but the earnings calendar is light. February housing starts jumped well above expectations to a seasonally adjusted annual rate of 1.501 million. Consensus from Briefing.com had been 1.385 million. Building permits, however, came in near consensus at 1.456 million. Separately, export prices rose 0.1% monthly in February while import prices rose 0.4%. The 0.1% increase in export prices was a big drop from January's 1.5% gain, while import prices rose the same amount in both months. Treasury yields ticked up slightly after the numbers crossed.
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Three things to watch
- Growth update: The Atlanta Fed's GDPNow meter got updated Monday to –2.1%, better than the gross domestic product (GDP) levels it projected earlier this month but still in the red. "The labor market is showing signs of softness—the pace of job growth has slowed and the participation rate has fallen—and low consumer confidence and sentiment can hold back spending," said Collin Martin, director, fixed income strategy at the Schwab Center for Financial Research. "Uncertainty around tariffs and other policies out of Washington will likely be just as important as actual economic data releases for the time being."
- Fed ahead: Recent Fed speakers have been reluctant to promise near-term rate cuts amid changing tariff policy. Inflation remains well above the Fed's 2% target. Odds are 99% of a Fed rate pause tomorrow, according to the CME FedWatch tool, but the Fed's economic and rate projections will be closely watched. "We don’t expect any surprises at this week's FOMC meeting, with the Fed likely holding the federal funds rate in the 4.25% to 4.5% range," Schwab's Martin said. "With growth concerns now making the most headlines, Fed Chairman Powell will likely be asked about the balance of risks given that all of the uncertainty out there could weigh on the labor market. We still expect rate cuts later this year, likely in the second half."
- Tracking the lagging Seven: Arguably the biggest Wall Street story of the year, other than tariffs, is the Magnificent Seven selloff. By late last week, five of those formerly high-flying stocks were in bear territory, down 20% or more from their peaks, while the other two knocked on the door. There's a lot of talk in the media lately about how "cheap" some have suddenly become, but value is in the eye of the beholder. Yes, the average price-to-earnings (P/E) valuation of the group has come down appreciably from where it was collectively in the mid-to-high 30's at the peak, but it remains just under 26. That's the lowest since late 2023 and below the five-year average, but well above the 2022 low near 23. There's arguably plenty of room to fall before reaching the P/E lows of 2018 and 2022 where value investors might step into this group again. Near-term catalysts ahead of earnings include this week's Nvidia conference and Tesla's (TSLA) first quarter delivery numbers. Magnificent Seven stocks did poorly yesterday despite the overall market gains. One Magnificent Seven company made news this morning as Google parent Alphabet (GOOGL) announced the purchase of cloud security startup Wiz for $32 billion in cash.
On the move
- Bitcoin (/BTC) fell 2.18% before the stock market opened Tuesday, possibly a sign of risk-off trading after recent gains. Shares of crypto-sector stock MicroStrategy (MSTR) fell 2.6% this morning.
- Ralph Lauren (RL) jumped 3% in pre-market trading following an upgrade to Buy from Neutral from Goldman Sachs (GS). Goldman says the company has more limited exposure to key near-term macro risks versus its peers, including tariffs, department store slowdown, and the health of the lower-income consumer.
- Lucid Group (LCID) popped 2.8% after an upgrade from Morgan Stanley (MS) from to Equal Weight from Underweight. The firm believes Lucid can re-rate with new leadership that has the potential to bring forth an executable AI strategy via partnerships.
- Tesla (TSLA) fell another 2.8% early Tuesday after more steep losses Monday. RBC Capital lowered its price target on Tesla, though it says concerns about recent lower deliveries overseas could be overblown. It reduced its self-driving pricing and robotaxi penetration assumptions for Tesla.
- PepsiCo (PEP) fell 1.3% ahead of the open after getting downgraded to Equal Weight from Overweight by Barclays, which cited pressure on the food business. Separately, PepsiCo said yesterday it will pay about $1.7 billion for soft drink maker Poppi, MarketWatch reported.
- Hong Kong's Hang Seng Index (HSI:HK) climbed 2.5% to its highest level since 2022, led by strength in electric vehicle manufacturers and as President Trump said President Xi may visit Washington, D.C., in the not-too-distant future.
- Market breadth took a beating the last two weeks and is now well below peaks from earlier this year. Only 36% of SPX stocks traded at or above their 50-day moving averages as of the end of last week, and just 41% traded over the 200-day moving averages. Typically, broader participation suggests healthy investor sentiment and supportive technicals.
- The Cboe Volatility Index (VIX) slipped below 21 Monday after nearly touching 30 early last week. Furthermore, the Cboe VVIX Index, which measures volatility of the VIX itself, has fallen from recent highs, a sign that hedgers are pulling back from some of their expectations for outsized market moves.
- Chances are now 99% that the Fed will keep rates unchanged this week, according to the CME FedWatch tool. Chances for a May rate cut are about 21%. The futures market still prices in around a 67% chance that rates will be cut at least 25 basis points by June.
More insights from Schwab
Recession watch: How worried should investors be about a recession? In their latest analysis, Schwab's Liz Ann Sonders and Kevin Gordon discuss things to watch. "When thinking of the dominoes that may fall in the current cycle, we clearly need to add in a domino for inflation turning back higher," they said. Other key items include purchasing managers indexes, financial conditions, and the outlook for earnings.
Bank roundup: The Fed competes for attention Wednesday with the Bank of Japan (BoOJ), "which is expected to maintain the target rate after a hike of 25 basis points at the last meeting in January," said Jeffrey Kleintop, chief global investment strategist at Schwab, in his Weekly Market Outlook. On Thursday, the Bank of England is expected to hold after three cuts since August.
Chart of the day
Data sources: Nasdaq. Chart source: thinkorswim® platform.
For illustrative purposes only. Past performance does not guarantee future results.
The PHLX Semiconductor Index (SOX—candlesticks) closed higher for the week last Friday for the first time in a month, but remains down sharply from last month's highs and down even more dramatically from the peak last summer. The recent dive took SOX to a level that lines up closely with lows posted last spring and last August, suggesting it may have reached a place where some buyers felt more comfortable stepping in (red line).
The week ahead
Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.
March 19: FOMC rate decision and expected earnings from General Mills (GIS).
March 20: February existing home sales, February leading indicators, and expected earnings from Darden Restaurants (DRI), FedEx (FDX), Lennar (LEN), Nike (NKE), and Micron (MU).
March 21: No major earnings or data expected.
March 24: Expected earnings from KB Home (KBH).
March 25: March Consumer Confidence, February new home sales, and expected earnings from McCormick (MKC).
