Here is Schwab's early look at the markets for Thursday, October 8.
With a thin earnings and economic calendar on deck today, investors will likely remain focused on Treasury yields, oil prices, and developments in the Middle East.
There are a few notable events to watch, however. Weekly jobless claims could draw more attention than usual this morning after a tepid September jobs report, and the Treasury will auction 30-year bonds this afternoon as investors continue to assess demand for longer-term government debt.
The auction comes after both 10-year and 30-year Treasury yields briefly touched 24-year highs yesterday. A solid 10-year Treasury auction helped ease pressure on the bond market in the afternoon, but long-term yields still ended the day higher.
“It was a pretty successful auction which suggests there's demand for Treasuries at these levels,” noted Cooper Howard, director of fixed income research and strategy for the Schwab Center for Financial Research, or SCFR. “The bid-to-cover ratio, which is an indicator of demand, was the highest since 2016.”
Another potential catalyst for Treasury yields—September’s Federal Open Market Committee, or FOMC, minutes—ultimately offered few surprises.
“Most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end,” the minutes read. “Participants emphasized, however, that they approached each meeting with an open mind and decisions at future meetings would depend on incoming information and its implications for the outlook and the balance of risks.”
After the release of the FOMC minutes, the odds of an October rate hike fell, but only slightly. Futures trading priced in 17% odds of a hike this month and nearly 85% odds of at least one hike by year-end, according to the CME FedWatch Tool.
Signs of solid demand for Treasuries and a relatively uneventful FOMC minutes release yesterday weren’t enough to quash the rise in yields entirely.
Government bond yields have been rising globally throughout the year due largely to surging oil prices, elevated inflation, and concerns about the fiscal health of many developed nations. French 10-year bond yields have jumped more than 100 basis points since January, while the UK’s 30-year gilt yield crossed 6% earlier this month and Japan’s 10-year government bond yield is still sitting near 30-year highs.
U.S. markets have largely managed to look past the global rise in yields this year amid strong earnings and AI enthusiasm, but consumers are feeling the impact.
The average 30-year fixed mortgage rate jumped to 7.49% on Wednesday, according to the Mortgage Bankers Association. That's the highest level since November 2023. Mortgage applications sank 4.2% last week as well, and purchase activity was down 15% from a year ago.
The New York Federal Reserve’s Survey of Consumer Expectations also showed consumers are increasingly concerned about near-term inflation. Median one-year inflation expectations jumped 0.3 percentage points to 3.9%, the highest level since May 2023.
Consumers’ outlook for the labor market was more optimistic, however, with mean unemployment expectations falling 0.5 percentage points to 43.9%. The mean perceived probability of losing one’s job in the next twelve months also decreased by 0.3 percentage points to 13.5%, its lowest level since December 2024.
While consumers are seemingly not overly concerned about the labor market, investors will be closely watching weekly jobless claims this morning after September’s weaker-than-expected jobs report.
The U.S. economy added only 29,000 jobs last month, leading the unemployment rate to tick up to 4.2%. So far, jobless claims have remained under control amid a low hire, low fire environment, but any sign of a significant uptick could complicate the Fed’s inflation fight. Consensus expects 200,000 jobless claims for the week ending October 3, up slightly from the prior week’s level.
The earnings calendar remains light today as we head into third quarter earnings season, but PepsiCo may attract attention. Consensus expects earnings per share of $2.30 on revenues of $25 billion. Those figures would represent flat year-over-year earnings growth and only a 4% jump in revenues. The food and beverage company has faced headwinds from declining snack volumes and higher input costs this year.
Turning to Wednesday’s individual market movers, Skydance fell roughly 6.8% in its second day of trading after the completion of the mega merger between Paramount Skydance and Warner Bros. Discovery. Analysts remain concerned about the company’s $80 billion debt load, particularly after Fitch Ratings downgraded its credit rating on Monday.
SpaceX dipped 2.5%, halting its recent rebound after the Financial Times reported Tuesday evening that the company is looking to raise $40 billion to buy Nvidia chips.
Caterpillar and Deere stock sank 5.8% and 3.7%, respectively, after regulators launched a public inquiry into anticompetitive practices and repair restrictions in the farm equipment industry.
Overall, seven out of 11 S&P 500 sectors ended Wednesday in the red. Healthcare, consumer discretionary, and consumer staples led the pack, while industrials and materials fell as yields and inflation anxiety rose.
Although major market indexes retreated from record highs on Wednesday, market breadth barely budged. Roughly 44% of S&P 500 stocks traded above their 200-day moving average, while 28% traded above their 50-day moving average. Meanwhile, other technical analysis metrics have rebounded in recent sessions.
“If you looked only at the S&P 500 and Nasdaq, you'd think this market was in great shape all year. But beneath the surface, we were actually seeing what I would call a stealth correction,” said Rachel Dashiell, head of technical research and strategy at SCFR. “Participation became increasingly narrow. In several breadth measures, conditions deteriorated to levels not seen since the April 2025 correction. What's notable now is that many of those indicators appear to be turning higher.”
The Dow Jones Industrial Average® ($DJI) fell 341.41 points (-0.66%) Wednesday to 51,179.87; the S&P 500 Index ($SPX) sank 17.16 points (-0.22%) to 7,801.77, and the Nasdaq Composite® ($COMP) dropped 61.20 points (-0.22%) to 27,538.69.