Here is Schwab's early look at the markets for Thursday, June 25.
Memory chip giant Micron's solid results late yesterday and May Personal Consumption Expenditures (PCE) price data at 8:30 a.m. ET today likely set the tone for Wall Street.
Micron got things started on a positive note. Its earnings strength could translate into positive performance for other chip stocks after two sessions of struggles, though there's no guarantee.
Micron shares initially climbed more than 9% in post-market trading late Wednesday as earnings per share of $25.11 easily beat consensus of $20.83 while revenue of $41.46 billion topped consensus of $35.85 billion. Gross margin of 84.9% was up sequentially, and the company cited "rapidly growing demand."
For the current fourth fiscal quarter, Micron projected earnings per share between $30 and $32, well above consensus of $25.72, and revenue of $49 billion to $51 billion. That topped consensus of $43.58 billion, per FactSet.
In another positive corporate news development after Wednesday's close, the Federal Reserve's annual bank stress test confirmed banks are well positioned to weather a severe recession and continue lending to households and businesses. Banks often announce dividend increases after passing this test.
Looking ahead to PCE, due at 8:30 a.m. ET, analysts expect headline monthly growth of 0.5% and annual growth of 4%. Monthly core PCE, which excludes volatile food and energy, was expected to rise 0.3%, with annual core PCE up 3.4%.
Today also brings weekly initial jobless claims, expected to be 225,000, in line with recent readings. That's still near three-month highs.
The final government estimate of first quarter gross domestic product (GDP) growth also comes at 8:30 a.m. ET and is seen remaining at 1.6% on an annualized basis, the same as the second estimate.
In data Wednesday, May new home sales missed consensus by quite a bit at a seasonally adjusted annual rate of 580,000. They'd been expected to total 627,000, up slightly from 626,000 in April, according to Briefing.com. They fell 6.8% year over year, with median sales prices flat.
Treasury yields could be influenced by inflation and GDP data. As of late Wednesday, the benchmark 10-year Treasury note yield was down sharply at just above 4.40%, the lowest since May 11, despite Wednesday's 5-year Treasury note auction seeing soft demand. Weak housing data and lower oil prices might have pushed yields down. Shorter-term yields fell less, flattening the yield curve. A 7-year Treasury note auction looms later today.
The U.S. dollar index continues hitting new 2026 highs, supported by ideas the Fed could hike rates at least once this year, though that's far from assured.
"A Fed rate hike is fully priced in by October, and there’s a rising implied probability that a hike comes a month earlier at the September meeting," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "We are not there yet—we need to see how the inflation outlook evolves over the next few months before we become more certain a hike is likely."
Last week’s Fed statement made it clear the committee favors its inflation mandate over its labor market mandate right now given the recent strength in the labor market, and Fed Chairman Kevin Warsh repeatedly stated that the committee was “unambiguous and unanimous” in its commitment to bringing inflation down. The updated dot plot of Fed rate expectations also showed that nine participants now project a hike this year.
From a broader perspective, a bull market remains in place, supported by strong earnings and a resilient economy, though there are still underlying vulnerabilities beneath the surface, said Liz Ann Sonders, chief investment strategist at the SCFR.
Major indexes finished flat to lower Wednesday after a flurry of "buy the dip" interest to start the session. Chip stocks mostly reversed their early gains to finish lower ahead the Micron results, and a generally cautious, risk-off attitude seemed to prevail ahead of PCE.
The risk-off sentiment showed up in cryptocurrencies where bitcoin fell back below $60,000 in a 4% skid Wednesday that sent bitcoin to 21-month lows intraday. That plunge hurt crypto-related stocks.
Tuesday's meltdown in technology shares, particularly chips, looks less like a broad deterioration in fundamentals and more like froth coming out of crowded AI and semiconductor positioning. The S&P 500 tech sector was up 27% over the last three months, making it the only sector to surpass S&P 500 Index growth of 9.8% over that stretch. Seen in that light, recent pullbacks in tech seem unsurprising, as it's hard for any one sector to maintain that kind of premium to the broader market over a long period.
The rest of this week is a bit light on catalysts other than tomorrow's University of Michigan final June Consumer Sentiment report, but the coming week features a full array of jobs data in a shortened span before markets close Friday, July 3 for the U.S. Independence Day holiday. May job openings, June payrolls, and June layoffs await anyone who doesn't leave early for the long weekend, with nonfarm payrolls due next Thursday.
Six of 11 S&P 500 sectors finished positive Wednesday, the second straight session that the index-level losses didn't translate into a broad sector weakness. Discretionary led the way, followed by industrials. Both appeared helped by declining Treasury yields. Energy slipped the most as crude prices lost 4% amid news of more ships making their way through the strait, while info tech fell on hard times again late in the session to post 1% losses.
"This 'buy the dip' price action looks tentative," said Nathan Peterson, director of derivatives research and strategy at SCFR. "There are several factors that may be impacting trader psychology," including quarter-end rebalancing, which could lean toward funds trimming equities.
Year-over-year margin debt in the U.S. is near 2000 and 2008 highs and considered excessively speculative. "Of course, the AI infrastructure complex/tech trade is where the money has been pouring into, so caution is warranted from a near-term trading perspective," Peterson said.
From a technical perspective, the 50-day moving average for the S&P 500 Index remains a possible support point at 7,348. The index has held just above that the last two sessions and hasn't closed below it since April 7. If it does fall and finishes under the 50-day several straight sessions, that would likely be seen as bearish, technically.
The S&P 500 is on track to finish June lower by about 3% after surging in April and May. June is a weak month, historically. Next month brings more catalysts as earnings season gets underway.
Among individual movers Wednesday, KB Home jumped almost 17% after a mixed earnings report late Tuesday that saw revenue top analysts' expectations while earnings missed and home deliveries fell 23%. Shares might have been helped by solid margin guidance and by a bill that passed Congress this week aiming to improve home affordability. This news appeared to aid much of Wall Street's housing sector Wednesday, as did falling yields.
Mining names came under pressure as gold and silver dropped. Newmont slid 4%. Gold is down due partly to the stronger dollar and growing chances of a Fed rate hike at some point this year. A hot PCE report might raise hike chances, putting more pressure on gold.
SpaceX fell almost 1% but remained above its $150 IPO price. The wild swings so far partially reflect news of a $25 billion debt sale that, according to Bloomberg, met a "skeptical audience" in the bond market, judging by its premium pricing.
Corning climbed 6% after analysts at Needham said Nvidia is "embarking on a massive project to construct an entirely new very high capacity global long-haul telecom network" and that Corning could benefit.
Wendy's surged 26% after Barron's reported that online posts were talking the company up as the next "meme" stock. Shares were off almost 50% over the last year as consumers ate out less, and any meme stock tends to be quite volatile.
Cerebras Systems dove 19% despite first-quarter revenue exceeding analysts' expectations amid broad-based growth. Investors appeared concerned about margin and shares sank to post-IPO lows.
Apollo Global Management dropped 6% after the firm capped withdrawals from a private credit fund.
Airline shares soared as yields and crude oil prices fell.
Alphabet was flat despite news it will replace Verizon in the DJIA effective next Monday. Alphabet gives the DJIA greater exposure to digital advertising, cloud infrastructure, AI, hardware, autonomous mobility, healthcare technology, and media distribution. Its higher share price also gives it more influence on the index than Verizon had. Verizon fell 2.3%.
The Dow Jones Industrial Average® ($DJI) gained 182.06 points (+0.35%) Wednesday to 51,848.90; the S&P 500 Index ($SPX) slipped 7.24 points (-0.10%) to 7,358.22, and the Nasdaq Composite® ($COMP) gave back 110.40 points (-0.43%) to 25,476.64.