Here is Schwab's early look at the markets for Tuesday, March 17.
Though the Federal Reserve's meeting starts today, focus likely remains on crude after a slight drop in that closely watched commodity brought buyers back to Wall Street to start the week.
Crude fell below $95 per barrel and stocks jumped 1% yesterday on hopes the U.S. might organize an international coalition to move crude through the Strait of Hormuz. Also, media reports said several ships had traversed the narrow gap over the weekend. Though traffic is mostly at a standstill, keeping as much as 15 million barrels of Gulf oil from reaching the market each day, market participants appeared to welcome any sign of possible progress.
Brent crude, which tracks global prices, still closed above $100 Monday for the third straight day, something that hasn't occurred since 2022.
"Iran-related geopolitical risk has boosted energy leadership and volatility, while elevated stock- and sector-level swings reinforce the importance of diversification, rebalancing, and fundamentals-driven, active decision-making," Schwab experts noted in their recent market outlook.
The Fed meeting is widely expected to end with no change to rates when a decision gets announced tomorrow afternoon but could offer intrigue on other issues. These include the central bank's economic projections and its "dot plot" of future rates. The meeting could also offer clarity on Chairman Jerome Powell's plans, assuming his term ends on time in May.
The timing is for question because Republican Senator Tom Tillis has vowed to block a vote on President Trump's nominee for chairman, Kevin Warsh, until a criminal investigation of Powell ends. The investigation, related to the Fed's headquarters renovation, appears to face new roadblocks after a federal judge last week denied the administration's request to subpoena Powell, a ruling that's now under appeal.
As of late Monday, the CME FedWatch Tool showed virtually no chance of a cut at this week's Fed meeting and little chance of cut before September. That's the first month where chances approach 50%.
The Fed, the European Central Bank, the Bank of England, and the Bank of Japan all meet this week, starting with the Fed decision Wednesday afternoon. Policymakers must simultaneously address energy-driven inflation gains and a dismal U.S. jobs climate.
Data to watch before the Fed decision includes Wednesday's February Producer Price Index, or PPI. Though the report was compiled last month and won't reflect any war-related price impacts, it's been an interesting metric lately, showing signs of hotter costs even before oil spiked.
PPI, due at 8:30 a.m. ET tomorrow, is expected to rise 0.4% for the core reading excluding food and energy, down from January's surprising 0.8% monthly gain. Wholesale prices sometimes can be a canary in the coal mine for consumer prices, indicating higher costs at the wholesale level that might eventually get passed along to customers.
Yesterday's February industrial production data for February rose 0.2% from a month earlier, below the 0.4% consensus. However, the market might be in "bad news is good news" mode, with weaker economic data possibly raising hopes for rate cuts before late this year. That, however, would likely depend on the price of oil and the course of the war, too.
There's a smattering of housing data ahead and pending home sales today followed by January new home sales on Thursday. Rates for 30-year mortgages hover near 6%, a relatively low level compared with most of the last year, and February existing home sales prices barely rose, according to the National Association of Realtors, which said housing affordability is improving.
Following the close today, lululemon reports. Earnings come amid a proxy battle as founder Chip Wilson tries to change the company's board, news first reported earlier this year by the Wall Street Journal. Last time lululemon reported, it beat expectations, but its U.S. business remained under pressure.
The U.S. dollar slipped along with crude Monday, and the 10-year Treasury yield fell slightly but remains elevated at 4.22%. Yields and the dollar had been climbing amid concerns energy shortages could fuel inflation at home and slower growth abroad.
In corporate news, Nvidia's GPU Tech Conference, or GTC, began Monday with a speech by CEO Jensen Huang. Nvidia is expected to show multiple hardware innovations, potentially including a new chip for inference, the process of generating results from AI models. Investors might also want to monitor the conference, which continues today, for any updates on war-related impacts on the industry. Supply chains and costs might be affected by rising oil prices.
Nvidia was up around 2.5% late Monday when Huang began his keynote speech but finished up just 1.6% for the session. Huang said revenue from Nvidia hardware could total $1 trillion through 2027 as demand climbs thanks to inference. Demand is booming for the company's Blackwell and Vera Rubin chips, he said, according to CNBC. Vera Rubin is expected to debt later this year. Nvidia also unveiled its Nvidia Groq 3 Language Processing Unit, CNBC reported.
More chip market metrics could be ahead tomorrow afternoon when memory chip giant Micron reports. Its shares are among the few high-flyers lately, helped by rising prices for its products amid a supply shortage.
The week began with major indexes rising across the board, led by the tech-heavy Nasdaq Composite's 1.2% gain. The S&P 500 Index clawed back to nearly 6,700. This followed settlements at nearly four-month lows Friday with Magnificent Seven stocks collectively trading back where they were last September. It's been hard to find shelter amid the selling, with energy and software among the few areas showing strength last week.
That changed Monday. For the first time in a while, all 11 S&P 500 sectors finished green for the session. Sectors dominated by Magnificent Seven stocks led the way, with discretionary, info tech, and communication services forming a trifecta as each rose 1% or more.
Defensive areas like utilities and staples trailed cyclical areas that tend to do better in an improving economy.
Energy finished second-worst among sectors, still well behind the pace of crude oil since the war began. This marked a reverse from before the war when energy shares rose almost from the start of the year even while oil mostly languished. The sector might be less tied to crude prices now than in the past as natural gas and downstream firms involved in transport of energy make up a bigger share, CNBC reported.
From a technical angle, focus remains on the 200-day simple moving average of 22,191 for the Nasdaq Composite. The index closed under its 200-day average on Friday for the first time since May, a weak sign, before clawing back above it Monday. Continued closes above that level might be viewed as constructive.
The S&P 500 Index still hovers not far above its 200-day moving average near 6,610 despite yesterday's gain, and Monday's "inside" session where the index stayed within the highs and lows from Friday didn't help matters technically. Bulls wanted Friday's high of 6,733 taken out and didn't get it.
Checking market breadth, the last two weeks have been devastating. By late Monday, less than 34% of S&P 500 stocks traded at or above their 50-day moving averages, far below the 59% that had been the average over the last six months and down from 65% earlier this month.
In individual trading Monday, Meta climbed more than 2% after Reuters reported the company's workforce could shrink 20% as part of an effort to offset heavy AI spending and as the company grows more efficient due to AI. There's been no date set yet for job cuts at the company, which employed 79,000 people as of December 31.
Nebius Group soared 15% after it announced a new five-year AI infrastructure supply agreement with Meta to provide $12 billion of dedicated capacity across multiple locations, including one of the first large-scale deployments of the Nvidia Vera Rubin platform.
Chip stocks advanced, with the PHLX Semiconductor Index up 1.8%. The move followed a Reuters report that the U.S. Commerce Department has withdrawn a draft rule that would have revised AI chip export controls.
Consumer-focused stocks generally performed well Monday and probably remain closely tied to the ups and downs of oil. Cruise lines, Tesla, and airlines advanced. However, the airline sub-sector of consumer discretionary is among the worst market performers this year and was down sharply from January highs even before the war began.
Bitcoin futures climbed nearly 4% to their highest intraday level, at nearly $75,000, since February 4. Crypto-related stocks gained as well.
Home builder stocks generally did well Monday as Treasury yields eased.
Dollar Tree climbed more than 5% Monday after reporting better-than-expected earnings and guidance.
Major Chinese indexes rose more than 1% Monday following positive economic data including a larger-than-expected rise in February industrial production of 6.3% annually. Retail sales rose 2.8% annually, also above expectations.
The Dow Jones Industrial Average® ($DJI) added 387.94 points Monday (+0.83%) to 46,946.41; the S&P 500 Index (SPX) rose 67.19 points (+1.01%) to 6,699.38, and the Nasdaq Composite® ($COMP) climbed 268.82 points (+1.22%) to 22,374.18.