Schwab Market Update

Published as of: June 9, 2025, 9:08 a.m. ET

(Monday market open) With jobs data out of the way, investors brace for inflation reports and Treasury auctions this week with stocks slightly higher early Monday. Budget negotiations on Capitol Hill are another focal point, along with Apple's (AAPL) Worldwide Developers Conference. Trade remains top of mind, too, as U.S. and Chinese representatives will meet in London today. Earnings are scattered but include Oracle (ORCL) on Wednesday.

Stocks went on a tear Friday to end a solid week, lifted by better-than-expected May U.S. jobs growth of 139,000. Analysts had expected 130,000. Wages also rose more than expected. "As long as the job market remains strong and the potential economic disruptions from trade and tariffs remain in check, it appears that the S&P 500 wants to test the all-time high of 6,144 at some point over the next month," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. However, he added, "uncertainty around trade remains elevated, and the 90-day trade negotiation window is set to expire in about a month."

The 10-year Treasury note yield remains slightly above 4.5% after the jobs data reduced chances of Federal Reserve rate cuts. The next key road sign looms Wednesday when the government puts 10-year notes up for bid. May inflation data Wednesday and Thursday also could shape the Treasury market. "Investors are more comfortable if yields are rising because of improving longer-term growth expectations rather than concerns over deficits and fiscal sustainability," Schwab's Peterson said.

1. Apple conference begins with an eye on AI: Apple's Worldwide Developers Conference starts today, drawing attention to the massive company and its huge market capitalization. A year ago, investors eagerly awaited Apple's update on AI features. But after what some analysts termed a disappointing debut for the AI assistant, many investors want to know how Apple plans revive its AI offerings. Analysts expect more details about Apple's partnerships, AI expansion, possible new AirPod features, and interface, Barron's reported. And Bloomberg said to look for introduction of a new gaming app. This comes after Needham lowered its rating on Apple to Hold last week, citing earnings risk, competition, and valuation. Whatever investors end up learning, Apple shares could be in focus this week after trailing most of their Magnificent Seven peers during the overall market's 20% comeback from April lows.
    
2. So long, debt ceiling? President Trump called on Congress to scrap the debt limit in a social media post last Wednesday, noting that this position is a rare instance where he agrees with liberal firebrand Senator Elizabeth Warren, D-Mass. The post injects another element of uncertainty into the Senate negotiations on the One Big Beautiful Bill, the massive tax and spending legislation that passed the House last month. That bill contains a $4 trillion increase in the debt ceiling. Treasury Secretary Scott Bessent has said that the U.S. will default sometime in August if Congress doesn't raise the debt ceiling by then. The U.S. has never defaulted, but if it happened it would likely have catastrophic consequences across markets and the economy, reducing economic growth and undermining consumer and business confidence. "While it is unlikely that the Senate will pivot to scrapping the debt ceiling in this legislation, it is an issue that appears to be gaining momentum," said Michael Townsend, managing director of Schwab's Office of Legislative and Regulatory Affairs. "But if Congress does move in that direction in the future, the markets would likely cheer. Drama over whether the debt ceiling would be raised in time has created market volatility in recent years."
    
3. Layoff landscape gets more jagged: While last Friday's nonfarm payrolls report soothed near-term concerns about the labor climate, several smaller reports last week and even nuggets in the jobs report itself suggest the employment picture is slowing. Layoffs in the services economy, initial and continuing jobless claims, and the percentage of people working all came in on the wrong side of the ledger, and at the same time labor costs rose for employers. Fewer employees are quitting and more tell surveys they're worried they might lose their jobs. And they might have reason to feel that way, considering that Amazon (AMZN), Walmart (WMT), Procter & Gamble (PG), and Citigroup (C) announced job cuts in recent weeks even as federal government jobs fell by 22,000 in May and manufacturing job growth slumped by 8,000. The government also downwardly revised March and April jobs growth by a combined 95,000. On the brighter side, the two-week uptick in weekly jobless claims to eight-month highs might be a seasonal pattern suggesting the trend is a bit higher in the summer, said Kevin Gordon, director, senior investment strategist at Schwab. Also, ISM Services employment moved into expansion in May.

• Tesla (TSLA) slipped 1.7% in pre-market trading after a feud between President Trump and CEO Elon Musk went public. That dust-up could be a factor this week if it flares again, with potential ramifications not only for Tesla but for companies that compete with Musk's SpaceX. Tesla dropped 14.8% last week. Focus now turns to the possible launch of Tesla's Robotaxi in Austin, Texas, this week and a downgrade of the stock by Baird to Neutral.
   
• AppLovin (APP) fell 3.8% amid investor disappointment over the stock not being added to the S&P 500^® index (SPX), Bloomberg reported.
   
• Warner Bros. Discovery (WBD) rose 8.4% in the pre-market hours after the entertainment company announced it would split into two publicly traded companies: Streaming & Studios and Global Networks. The separation will strengthen both brands in each, Warner Bros. said in a press release.
   
• Omada Health (OMDA) inched up after rising more than 40% Friday in its initial public offering (IPO). The company offers virtual care for chronic conditions.
   
• Qualcomm (QCOM) rose 1% after announcing it will buy Alphawave Semi for $2.4 billion, saying its high-speed wired connectivity and compute technologies complement Qualcomm's processors.
   
• Bitcoin (/BTC) jumped more than 3.5% ahead of the open, and shares of crypto-related names like Coinbase Global (COIN) and Strategy (MSTR) added more than 2% ahead of the open. Recent tailwinds for crypto include the Trump administration's pro-crypto stance and the introduction of new fair-value accounting rules by the Financial Account Standards Board (FASB).
   
• Second quarter S&P 500 earnings growth is now seen at 4.9%, according to FactSet. That would be the lowest for any quarter since late 2023, and down from 13.5% in the first quarter. It's also well below the March 31 estimate of 9.3%. This comes as the forward S&P 500 price-to-earnings (P/E) ratio climbed back to near historic highs above 21.
   
• Chinese exports to the United States fell nearly 35% last month, the biggest monthly drop in more than five years. Overall Chinese export growth was 4.8% in May, down from 8.1% in April, and Chinese consumer prices fell, too, a potential signal of weak consumer demand.
   
• Technically, the S&P 500 index's (SPX) close on Friday just a whisker above 6,000 may be constructive, though that was below intraday highs. It was another three-month high and came after the index bumped its head against 6,000 and fell on Thursday, a technically weak move. Further closes above 6,000 would likely be needed to confirm technical strength. It was the first close above 6,000 since February 21.
   
• The Relative Strength Index (RSI) for the S&P 500 reached 66 last week, still shy of the 70 peak it touched in mid-May. Anything above 70 is typically considered overbought.
   
• Odds of a June rate cut are zero, and odds of a July cut dipped to 16%, according to the CME FedWatch Tool. September rate cut odds remain above 60%. Rate cut chances fell across the spectrum after last Friday's solid jobs report.

Sector Outlook Maintained: The Schwab Center for Financial Research (SCFR) maintained its Marketperform ratings for all 11 S&P 500 sectors, a shift made in April after the White House unveiled its tariff policy. "The level and timing of the tariffs have changed repeatedly since the April 2 announcement, making it challenging to determine which sectors might benefit or be hurt by them," SCFR said in its latest "Sector Views: Monthly Stock Sector Outlook."

Spot S&P 500 volatility measured by the Cboe Volatility Index (VIX—purple line) dropped below 17 late last week for the first time since late March, with anything below 20 signaling relatively light concerns about near-term market choppiness. However, the CBOE S&P 500 6-Month Volatility Index (VIX6M—candlesticks), which measures expected volatility over the next six months, remains just below 22, a possible sign that market participants remain somewhat on edge. VIX futures contracts going out into the rest of the year are in contango, meaning participants expect them to rise from here, but not above 22 in any of the contracts through next February.