Here is Schwab's early look at the markets for Tuesday, November 18.
November's washout worsened as the S&P 500 index closed at one-month lows Monday, hurt by crumbling cryptocurrencies and fresh AI worries ahead of Nvidia's earnings tomorrow. If the month ended today, it would be the first negative one since April, dragged by an 8% drop in semiconductor stocks and a 17% decline in Bitcoin futures as air goes out of the speculative tire.
However, it's not the end of the month, and plenty of earnings and data lie ahead this week, none more crucial than Nvidia late Wednesday. Nvidia could help soothe recent AI concerns if it raises revenue guidance. For now, however, it's an open question, and investors didn't cheer Nvidia's last two earnings releases.
"Traders appear to be taking some risk off the table ahead of the much-anticipated Nvidia earnings and jobs data releases later this week," said Alex Coffey, senior trading and derivatives strategist at Schwab.
Another concern is the technical picture, which took on more water after Monday's S&P 500 close below its 50-day simple moving average. Typically it would take a few days below that mark, now near 6,707, to signal a major change in what's been an upward trend.
Monday's dive was another in a series of recent 1% losses for the major indexes. That has traders concerned about more choppiness ahead, reflected in the Cboe Volatility Index's 15% climb to around 23 on Monday. That's the highest since mid-October.
The October VIX spike accompanied sudden concerns about possible bank exposure to bad credit, exemplified by two smaller banks that experienced struggles at that time. Soon after, JPMorgan Chase CEO Jamie Dimon used the term "cockroaches," to describe industry-wide credit concerns, meaning where you see one there's likely to be more. Some of those fears resurfaced over the last week, possibly contributing to the market's recent risk-off posture that's hurt cryptocurrencies.
"Credit fears, while relatively benign at this point, are starting to build and that certainly doesn't help risk assets either," Coffey said late Monday. "This isn't unique to today's session though, as many of the AI winners like Nvidia and Palantir have pulled back significantly from recent highs, as has Bitcoin."
Shares of Blue Owl Capital, a U.S. alternative investment asset management company, fell almost 6% Monday after The Wall Street Journal reported that the firm is financing data centers costing "tens of billions of dollars" for companies like Meta and Oracle. Shares of other AI-related companies including Broadcom, Advanced Micro Devices, Super Micro Computer, Palantir,and AppLovin all fell yesterday along with Nvidia.
U.S. money market fund assets squeaked out another record high last week above $7.54 trillion, suggesting more money moving to the sidelines.
With the long government shutdown over, data started filtering in Monday with August construction spending. The three-month old data is something investors will have to get used to as they comb through this week's reports, since most of it will be left over from summer or early fall and may not give much insight into current conditions.
That's likely the case on Thursday when the most important report of the week, September payrolls, gets released. Consensus is for jobs growth of 50,000 that month, which would likely keep unemployment at 4.3%.
"If the report is in line with expectations, it wouldn’t have implications for Fed policy," said Kathy Jones, chief fixed income strategist, Schwab Center for Financial Research. "However, if the report turns out to be significantly stronger or weaker than expected, the bond market is likely to react." That could mean yields, which have traded in a tight range between around 4.04% and 4.17% for the 10-year note, might spike or sink on a number way out of the zone.
With data collection affected by the shutdown, policy makers might not feel they have a good handle on data until around the new year. Monday featured Fed Governor Christopher Waller saying the Fed should cut rates next month to protect the labor market. But Fed Vice Chair Philip Jefferson said the central bank should move "slowly," media reports said.
"We are not expecting a cut," Schwab's Jones said. "Longer term, we expect one or two rate cuts in 2026, assuming economic growth and inflation slow. However, there isn’t much room for the Fed to cut unless inflation begins to trend lower quickly. Moreover, there is some economic stimulus in the pipeline due to the budget bill’s provisions. Lastly, financial conditions still appear to be easy."
Labor market concerns led the Fed to two rate cuts in September and October, but odds of another cut in December fell to around 43% by late Monday from 66% a week earlier, according to the CME FedWatch Tool.
Wednesday's minutes from the late October Fed meeting might provide fresh perspective on disagreements that surfaced there, as two voters dissented. Fed Chairman Jerome Powell said the meeting featured more than its usual share of debate.
The 10-year U.S. Treasury yield fell about two basis points to 4.13% Monday, remaining near the high end of its long-term range.
August construction spending gave investors a view of what conditions were like back when it was still summer, rising 0.2% from July versus the Briefing.com consensus of 0.1%, and even with the prior month's growth. On the whole, it wasn't a market mover considering the data's age and close correlation with expectations.
Factory orders for August are due shortly after the open today.
In other data yesterday, the Empire State Manufacturing Index surged to 18.7 in November, the highest in a year and up from 10.7 in October. Keep in mind, however, that manufacturing data tend to be choppy and manufacturing is a relatively small slice of the U.S. economy.
Home Depot kicks off the retail part of earnings season this morning amid a home improvement market that continues to face pressure.
As retailers report, investors will expect observations on the consumer. Sentiment in early November fell to historic lows, but Bank of America reported total credit and debit card spending rose 2.4% year over year in October, the strongest annual growth since early 2024. Holiday shopping is up, but consumers may be paying more for less, Bank of America said. So inflation could raise the amount spent even if consumers buy fewer items, and Bank of America data shows retail transaction volumes have slightly declined.
Investors get another look at November consumer sentiment on Friday when the University of Michigan provides its final update for the month.
Sector-wise, the resurgence of credit worries Monday hit financials, which fell nearly 2%, while info tech fell nearly as much amid the chip sector selling. Communication services was one of two S&P sectors to end in the green along with utilities, typically a defensive sector. But some of the other sectors that saw strength last week during the rotation out of tech, including energy and materials, couldn't sustain those gains Monday.
Checking individual stocks, Alphabet jumped 3% after Berkshire Hathaway disclosed a $4.3 billion stake in the company. Apple fell almost 2% after Berkshire Hathaway announced it had cut its position in that stock.
Dell plunged 8% after getting downgraded to Underweight from Overweight by Morgan Stanley. The firm believes the memory "supercycle" brings downside risk to hardware manufacturer earnings heading into 2026.
Delta Air Lines dropped 4% and United Airlines lost 5% despite the U.S. government ending shutdown-related flight restrictions. The weakness came as investors worried about the impact of those restrictions on fourth quarter earnings for the industry.
Technically, the S&P 500 index's 50-day moving average may be a level to watch on any turn-around effort today. A close above that might signal resilience. The S&P 500 index is down about 2.4% since the end of October and 3% below its all-time high.
The Dow Jones Industrial Average® ($DJI) dropped 557.24 points Monday (-1.18%) to 46,590.24; the S&P 500 index (SPX) backtracked 61.70 points (-0.92%) to 6,672.41 and the Nasdaq Composite® ($COMP) gave back 192.51 points (-0.84%) to 22,709.07.