Schwab Market Update

Published as of: June 3, 2025, 9:23 a.m. ET

(Tuesday market open) After starting June with light gains, stocks struggled for grip and yields fell early Tuesday as trade fears persisted and an international organization cut its global growth forecast, citing tariffs and trade policies. The Organization for Economic Cooperation and Development (OECD) now sees 2025 growth at 2.9%, down from 3.1%, and pegs U.S. growth at 1.6%, a sharp decline from the previous 2.2%. Economic concerns accelerated overnight following a surprisingly sharp drop in China's May manufacturing activity amid export weakness.

Back home, the April Job Openings and Labor Turnover Survey (JOLTS) arrives at 10 a.m. ET today after sliding to 7.19 million in March. Analysts expect something in the same neighborhood. That's well above average pre-pandemic levels but down from the post-COVID highs. The "quit" rate is another metric to watch, giving a sense of how easy it is for people to find new jobs. This is the first of several job reports coming down the pike, with ADP private employment data for May out early tomorrow and May nonfarm payrolls on Friday. Analysts see May jobs growth of 130,000, down from 177,000 in April, but a miss might jump-start hopes for Federal Reserve rate cuts.

It's a quieter week for earnings, but this afternoon brings results from CrowdStrike (CRWD) after the cybersecurity firm disappointed investors the last time it reported in March with guidance below Wall Street's expectations. The company announced yesterday it's collaborating with Microsoft (MSFT) to coordinate on identifying and tracking cyber threats. Watch automobile stocks, as today brings May motor vehicle sales figures. Ford (F) and General Motors (GM) both fell sharply yesterday after President Trump announced he'd raise steel and aluminum tariffs. Several smaller retailers reported this morning and appeared to impress, while a nuclear energy deal involving Meta Platforms (META) also caught investors' eyes.

1. Washington's deadlines could shape trading: The unofficial start of summer often brings lower volume trading, but two deadlines in early July threaten the seasonal doldrums. They're both Washington-related, as the Senate wants to pass its budget bill before July 4 and the 90-day extension of President Trump's "reciprocal" tariffs expires a few days later. "I expect some fairly significant changes to the bill—which could be problematic when it goes back to the House," said Michael Townsend, managing director, legal and government affairs at Schwab. Townsend also thinks the court battle over tariffs is "virtually certain" to end up at the Supreme Court, which could be a disincentive for other countries to make trade deals. However, the White House told CNBC Monday that Trump will talk to Chinese President Xi sometime this week, and Bloomberg reported that Trump is extending the tariff pause on some Chinese goods until August 31. "Clarity could help turn the market higher, but back-and-forth, tit-for-tat talk could bring bursts of volatility," said Liz Ann Sonders, chief investment strategist at Schwab. "Tensions between U.S. and Europe are also elevated given Trump's announcement of doubling of steel tariffs to 50%."
    
2. Watching Fed for clues ahead of ECB: After Fed Chairman Jerome Powell stayed mum on monetary policy in brief remarks yesterday, investors brace for more Fed talk today as Governor Lisa Cook addresses the economic outlook. Tomorrow brings the Fed's Beige Book, offering insights into regional economic activity around the U.S. in a release that's gained significance since the start of the trade war. It might be interesting to see what the report says about activity in West Coast areas where port traffic comprises an important part of the economy. In other monetary policy news, the European Central Bank's (ECB) policy decision comes Thursday morning. Analysts widely expect a 25-basis point rate cut from the ECB despite German inflation slowing less than expected in May. This follows a quarter-point cut in April, and would bring the benchmark down to 2%, from a peak of 4% two years ago. European stocks were up about 9% year to date through May, well ahead of the U.S. market.
    
3. Credit reports worsen, raising consumption worries: Millions of Americans have been hit with bad credit after missed student loan payments, The Washington Post reported. This could make it tougher for them to secure housing, insurance, car loans, or even employment. Credit scores dipped by more than 100 points for 2.2 million delinquent student loan borrowers and 150 points or more for more than one million in the first three months of 2025, according to an analysis by the New York Federal Reserve.  "You've already seen a pretty significant spike up in student loan delinquencies," Schwab's Sonders said. "So that's going to be on my radar as we get data on consumer credit over the next month or two."

• Constellation Energy (CEG) catapulted 13% in pre-market trading as Meta Platforms signed a 20-year deal to buy nuclear power from the firm. A Constellation nuclear plant in Illinois will begin providing power in mid-2027.
   
• Signet Jewelers (SIG) soared 12.3% early Tuesday after surpassing Wall Street's earnings and revenue estimates and raising fiscal 2026 guidance.
   
• Dollar General (DG) popped nearly 10% ahead of the open as quarterly results beat analysts' estimates and the company guided for in-line revenues and raised the lower end of its guidance.
   
• Mining firms Freeport-McMoRan (FCX) fell 1% and Southern Copper (SCCO) fell 1.6% ahead of the open, hurt by the unexpected return to contraction for China's Caixin General Manufacturing PMI, which slid to 48.3 in May. A 50 is needed for expansion. This was the steepest decline in the private survey since late 2022 and raised questions about demand for commodities. The official government survey out recently also showed contraction.
   
• Ferguson Enterprises (FERG) jumped 14.3% after the distributor of plumbing and heating products beat analysts' earnings estimates and raised its outlook.
   
• Omnicon (OMC) and Interpublic Group of Companies (IPG) inched higher early Tuesday after shares of those two large advertising firms slipped Monday following a Wall Street Journal report that Meta Platforms plans to offer brands the chance to fully automate ad creation using AI by the end of 2026. This could mean more competition for traditional ad agencies.
   
• Bitcoin (/BTC) rose nearly 1% early Tuesday and other cryptocurrencies rose even more sharply. Shares of crypto-related stocks Coinbase (COIN) and MicroStrategy (MSTR) both climbed 1% ahead of the open.
   
• The week began with about 65% of S&P 500 stocks trading above their respective 50-day moving averages, relatively flat compared with recent levels. The market looks like it's in wait-and-see mode on trade and the budget, which could mean a bit less volatility.
   
• Technically, major indexes remain rangebound. The S&P 500 index (SPX) has spent almost three weeks in range between the 200-day moving average of 5,787 and the May high near 5,960. Recent moves above 5,900 ran into selling, while moves below 5,850 found buyers.
   
• As of early Tuesday, futures trading indicated just a 5% chance of a Fed rate cut in June, and 25% in July, according to the CME FedWatch Tool.

Schwab global mid-year outlook: International stock market leadership could continue in the second half as uncertain U.S. policy and lagging U.S. stock performance causes many investors to look overseas for opportunities, said Schwab's Kleintop and Michelle Gibley, director of international research at the Schwab Center for Financial Research, in their analysis.

The last three months saw the S&P 500 index (SPX—candlesticks) carve a middle path between rising Treasury yields and a falling dollar. Both the rise in the 10-year Treasury yield (TNX:CGI—blue line) and the fall in the U.S. dollar index ($DXY—purple line) arguably reflect the unsettled U.S. trade and budget situation, which has hurt both the dollar and Treasuries (which trade inversely to their yields). A weak dollar can sometimes hint at soft U.S. economic growth, but recent data haven't backed that up. Even so, the dollar's weakness and rising yields may be two factors helping prevent the stock market from rising out of its near-term range.

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

June 4: May ISM Services PMI® and expected earnings from Dollar Tree (DLTR).
June 5: ECB rate decision and expected earnings from Broadcom (AVGO), Ciena (CIEN), lululemon (LULU), and Petco (WOOF).
June 6: May nonfarm payrolls.
June 9: Expected earnings from Casey's General (CASY).
June 10: Expected earnings from GameStop (GME) and Stitch Fix (SFIX).