Here is Schwab's early look at the markets for Wednesday, September 10.
Wholesale price data, due before the open, could set the tone. The August Producer Price Index (PPI) will likely get more attention than usual when it's announced at 8:30 a.m. ET after July's report sizzled in the summer heat.
That reading of 0.9% rattled markets. Another unpleasant inflation surprise today could reinforce ideas that tariff-related price pressure has begun creeping into wholesale prices. However, consensus is for milder readings, with Briefing.com expecting 0.3% for both headline PPI and core PPI, which strips out food and energy costs.
Anything above that could hurt the Treasury market, which slumped to four-month lows earlier this week following Friday's soft August jobs report. It also could influence next week's Federal Reserve decision.
The jobs report put a 50-basis point rate cut back in the picture as a small possibility, according to the CME FedWatch Tool. A PPI that exceeds expectations would likely mean no chance of 50 basis points, though a 25-basis point cut seems pretty much assured.
The PPI precedes the August Consumer Price Index (CPI) due early Thursday. With CPI, analysts expect 0.3% for both core and headline numbers, compared with 0.3% and 0.2% in July, respectively.
As of late Tuesday, the FedWatch Tool put odds of a rate cut next week at 100%, with 8% odds of 50 basis points instead of 25. For the full year, futures trading points toward three rate cuts. It might be worth checking again after PPI for any quick reaction from the futures market.
In data yesterday, the Bureau of Labor Statistics cut 911,000 jobs in its preliminary revision to employment data for the 12 months ending last March. That was above the highest analyst prediction and the largest downward revision since 2000. However, the impact on trading appeared minimal.
"Perhaps markets are relatively unphased by the report since it is dated, and weaker job growth has been telegraphed over the past two nonfarm payrolls reports," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. Markets have been forgiving of weak data in general lately, he added.
Overseas, meanwhile, stocks in Europe and Japan have been falling this week amid concerns about rising government bond yields, with financial stocks particularly affected. Governments in France, Japan, and the U.K. could begin to feel the need to reduce deficits to keep yields tame, causing near-term volatility.
"With the potential for fiscal tightening, investors in individual international companies may want to lean toward those that earn more revenues and profits outside of France, the U.K., and Japan," said Michelle Gibley, director of international research at the Schwab Center for Financial Research.
In corporate results late yesterday, Oracle missed analysts' earnings and revenue expectations, but shares still popped double-digits initially in post-market trading as investors appeared pleased with its forecast. Cloud infrastructure growth over the next five years looked robust, according to Oracle's projections, starting with an expected 77% rise this fiscal year to $18 billion. This sort of performance could reflect solid demand across the cloud industry, possibly helping sentiment around other cloud companies, too.
Also in the corporate world, Apple shares fell 1.6% Tuesday after the company unveiled its iPhone 17, iPhone Air, and Apple Watch Series 11. Apple highlighted the Air's status as thinnest iPhone ever made, and new health insights offered by the watch. It also used more of its own components—including the A19 Pro chip in the iPhone 17—rather than ones from other companies and left the iPhone 17 price unchanged from the current model at $799.
The stock's drop after the news was characteristic of performance following other recent product events, but shares are up almost 15% from the start of August. The question is whether the new products spark enough interest from current iPhone owners to change models. That's probably something analysts will track in coming months.
Beyond PPI, today's calendar is relatively light, though pet company Chewy reports before the open. Tomorrow brings earnings from Kroger and Adobe, but then earnings slow down next week, with little key data after Friday's University of Michigan Preliminary September Consumer Sentiment data.
With the jobs market apparently under pressure, sentiment could get a close look. So will tomorrow morning's weekly initial jobless claims and continuing claims reports due at 8:30 a.m. Thursday, as continuing claims have been high for a while and initial ones edged up last week.
Initial claims are seen at 240,000, according to Briefing.com, up from 237,000 a week ago. They had been around 220,000 much of the summer.
Major indexes closed at record highs Tuesday, aside from small caps that took a leg lower as yields climbed. Eight of 11 S&P sectors climbed as the weak jobs data created more optimism for rate cuts, with only materials seeing significant weakness. Leaders were a mixed group that included growth and defensive areas including communication services, utilities, health care and energy. Info tech, a leader over the past week, barely rose as Apple and Broadcom fell, though Nvidia continued clawing back from recent lows.
Breadth—which provides insight into how broad bullish sentiment is—stayed near 55% Tuesday in terms of S&P 500 stocks trading above their 50-day moving averages. That's relatively healthy historically.
UnitedHealth Group climbed almost 9% after it reaffirmed its annual earnings outlook. Shares are up 50% from early August lows.
CoreWeave added more than 7% after the Wall Street Journal reported that the AI cloud firm has launched a venture arm to invest in AI startups.
Communication services giants Alphabet and Meta Platforms both gained, and financial firms like Morgan Stanley and JP Morgan Chase recovered some of the losses they suffered after last week's jobs report.
Treasury yields rose Tuesday, snapping a four-day losing streak. Still, a three-year note auction saw "stellar" foreign demand, according to Briefing.com, perhaps a sign that international investors remain interested in U.S. assets.
Later today brings a 10-year Treasury auction likely to get attention after yields fell to four-month lows this week just above 4% for the 10-year note. Results are due early this afternoon. The question is whether investors will remain enthusiastic at these slightly lower levels after the 10-year note yielded around 4.3% most of the summer.
"The soft jobs report last week might put potential buyers in a better mood to snap up Treasuries at current rates while they can, but that also could depend on this week's inflation data and next week's Fed rate projections," said Collin Martin, director, fixed income strategy, at the Schwab Center for Financial Research. "If investors sense that longer-term yields aren't coming down much, they may not be so rushed to buy government debt at the current lower coupon rate."
Technically, the S&P 500 index continues to grind higher, with dips still being bought.
"Bullish sentiment appears resilient," Schwab's Peterson said. The relative underperformance in the S&P 500 Equal Weight Index—which gives all stocks the same weighting regardless of market capitalization--suggests that gains continue to come from the mega-caps, he added.
The Dow Jones Industrial Average® ($DJI) climbed 196.39 points Tuesday (+0.43%) to 45,711.34; the S&P 500 index (SPX) added 17.46 points (+0.27%) to 6,512.61, and the Nasdaq Composite® ($COMP) rose 80.79 points (+0.37%) to 21,879.49.
