Schwab Market Update
Stocks Up, Rate Cut Hopes Down on Decent Jobs Data
Published as of: May 2, 2025, 9:21 a.m. ET
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| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® index |
5,604.14 |
+35.08 |
+0.63% |
| Dow Jones Industrial Average® |
40,752.96 |
+83.60 |
+0.21% |
| Nasdaq Composite® |
17,710.74 |
+264.40 |
+1.52% |
| 10-year Treasury yield |
4.27% |
+0.04 |
-- |
| U.S. Dollar Index |
99.77 |
-0.48 |
-0.48% |
| Cboe Volatility Index® |
22.64 |
-1.96 |
-7.97% |
| WTI Crude Oil |
$58.55 |
-$0.69 |
-1.16% |
| Bitcoin |
$96,829.00 |
+$216.09 |
+0.22% |
(Friday market open) Another decent U.S. jobs report gave Wall Street an early lift but diminished rate cut hopes. The U.S. economy created 177,000 jobs in April, above expectations of 130,000 and little changed from the downwardly revised March gain. Unemployment stayed at 4.2%. The ho-hum data could counter worries that the trade war is hurting the labor market, at least in the early going.
"Overall, it shows the labor market is softening but not substantially deteriorating," said Cooper Howard, director, fixed income strategy, at the Schwab Center for Financial Research. "Nothing in this report should give the Fed a reason to think they should start cutting rates in the near-term. It's likely they'll stay on hold for the time being."
In other news, enthusiasm bubbled overnight here and in Asia on reports that China was considering trade talks with the U.S. But in an ominous note, Japan's finance minister said its U.S. Treasury holdings could be a card in trade talks, Bloomberg reported. That doesn't necessarily mean Japan is considering sales of its more than $1 trillion in U.S. Treasury note holdings. But coming after pressure on Treasuries last month that coincided with the trade war, it could reignite concerns of overseas buyers growing less enamored with U.S. assets. Any heavy sales in Treasuries, whether domestic or overseas, would drive yields higher, raising borrowing costs for U.S. consumers and businesses and bumping up Washington's interest bills.
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Three things to watch
1. Prior jobs growth revised down: Beyond the headline number, revisions took February and March jobs growth down by a combined 58,000 from what was previously reported, with March falling to 185,000 from 228,000. This means jobs growth was relatively steady those two months as trade fears mounted, and near long-term averages seen in pre-COVID 19 days. Also, the average work week was unchanged at 34.3 hours. A drop might have suggested companies could get by with fewer workers. Despite thoughts that federal government jobs would fall sharply, they were only down 9,000 in April. Health care saw the biggest growth with 51,000, followed by 29,000 in transportation and warehousing. Manufacturing fell slightly but leisure and hospitality was flat. "The gains were fairly broad across most sectors," Schwab's Howard said. "It shows that the economy remains on decent footing, but a lot of this data is prior to the full impact of the tariffs."
2. Breakfast with Buffett as Berkshire earnings loom: Investors ready for a break after what's been a long, jam-packed week may want to pay attention Saturday when Warren Buffett's Berkshire Hathaway (BRK.B) reports results and holds its annual shareholder meeting in Omaha. The legendary 94-year-old CEO is expected to participate in the discussion, and questions could come up about the firm's plans, if any, to use its hefty cash stash to buy any companies or take large new positions in the stock market. It's been many years since Berkshire Hathaway made a major acquisition, and also since the company repurchased shares. With the stock up sharply this year, analysts think a new buyback program is unlikely, and as long-term investors know, Buffett doesn't pay dividends. Buffett will be joined on stage by his likely successor, Greg Abel, giving investors a chance to hear how both view the market and what possible opportunities they see for the conglomerate. Housing, energy, and snack food companies are ones analysts think might catch Buffett's eye if he's in an acquiring mood, Barron's reported.
3. Mega cap earnings drag tech: Amazon (AMZN) and Apple (AAPL) both dropped early today after delivering disappointing results as key profit drivers fell short. The 16.9% year-over-year growth in the Amazon Web Services cloud business missed Wall Street's thinking and was down sequentially from 19%. By comparison, Microsoft's (MSFT) Azure cloud revenue rose 33%. Amazon beat earnings and revenue consensus and delivered second quarter revenue guidance roughly in line with expectations. Apple's results exceeded Wall Street's expectations on earnings per share, revenue, and iPhone sales. But the quarter fell just short on the services side, which grew 12%, more slowly than expected. That's the division that drove strong profit growth in past quarters and has an outsized impact on investor sentiment, especially at a time when Apple faces so many iPhone challenges in China. Speaking of which, Apple said U.S. tariffs could cost it $900 million in the current quarter.
On the move
- Amazon was down 0.79% ahead of the open, clawing back more substantial earlier losses. Amazon expects second quarter net sales growth of between 7% and 11%, a wide range. Amazon said the outlook is "subject to substantial uncertainty" for many reasons, including tariffs.
- Apple dropped 3% in pre-market trading Apple's China revenue last quarter came in about $1 billion below analysts' expectations. And while iPhone sales grew from a year ago, that product didn't see "pull-forward" buying ahead of tariffs, Apple said. The company subsequently got downgraded by two analysts.
- ExxonMobil (XOM) rose 0.5% after beating Wall Street's earnings expectations. The company continued its stock buybacks despite falling crude oil prices.
- Chevron (CVX) pulled back 1.86%. It's slowing the pace of its buybacks and said profit declined as oil prices fell.
- Roku (ROKU) plunged 8.4% after offering an outlook that came in below Wall Street's consensus views. Economic uncertainty and competition both pose challenges, Reuters reported.
- Amgen (AMGN) jumped 1.5% as it beat analysts' earnings and revenue expectations and reaffirmed its fiscal 2025 guidance. It reported strong demand with 11% product sales growth.
- Airbnb (ABNB) dropped 5.1% ahead of the open after delivering weaker-than-expected guidance and citing declining demand for travel, Bloomberg reported.
- MicroStrategy (MSTR) climbed 1.8% despite the crypto-related company reporting a wider loss on falling revenue.
- Block (XYZ), formerly known as Square, dropped more than 21% ahead of the open after the tech and financial services company lowered its full-year earnings guidance. Quarterly revenue came up short.
- Reddit (RDDT) climbed 7.3% ahead of the open as investors embraced its forecast for better-than-expected revenue. Earnings also surpassed analysts' expectations.
- From a technical angle, the S&P 500 index (SPX) couldn't close a chart gap yesterday that extends to the April 2 close of just below 5,671. The index did close above its 50-day moving average near 5,590 for the first time since late February. But key resistance could be the 200-day moving average of 5,746. "The technicals have undergone some much-needed healing over the past couple weeks," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research.
More insights from Schwab
Decision making in volatile markets: During severe downturns, investors often suffer "loss aversion" and want to take action to feel better. But that can cause panic selling that doesn't fit long-term goals. There's also ambiguity aversion, which investors suffer when there are unknown probabilities. The latest Schwab Financial Decoder podcast explores how investors might want to approach decision making during these times of policy uncertainty.
" id="body_disclosure--media_disclosure--273206" >Decision making in volatile markets: During severe downturns, investors often suffer "loss aversion" and want to take action to feel better. But that can cause panic selling that doesn't fit long-term goals. There's also ambiguity aversion, which investors suffer when there are unknown probabilities. The latest Schwab Financial Decoder podcast explores how investors might want to approach decision making during these times of policy uncertainty.
Chart of the day
Data sources: S&P Dow Jones Indices. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
The S&P 500 index (SPX-candlesticks) made an important technical move yesterday by closing above its 50-day moving average (blue line) for the first time since late February. But it couldn't close a gap to the April 2 settlement near 5,671 (red line), which may have triggered technical selling later Thursday. Near-term resistance is likely near the 200-day moving average (green line). The index has been rallying roughly since the time of the "death cross" last month that saw the 50-day fall below the 200-day.
The week ahead
Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.
May 3: Expected earnings from Berkshire Hathaway (BRK.B).
May 5: April ISM Services PMI® and expected earnings from Palantir (PLTR).
May 6: Start of FOMC meeting and expected earnings from Archer-Daniels-Midland (ADM), Duke Energy (DUK), Marriott International (MAR), Advanced Micro Devices (AMD), Wynn Resorts (WYNN), and Rivian Automotive (RIVN).
May 7: FOMC rate decision and expected earnings from Johnson Controls (JCI), Uber (UBER), Walt Disney (DIS), AppLovin (APP), Arm Holdings (ARM), DoorDash (DASH), and Occidental Petroleum (OXY).
May 8: Q1 Productivity-preliminary and expected earnings from Tapestry (TPR), ConocoPhillips (COP), Anheuser-Busch (BUD), Shopify (SHOP), Warner Bros. Discovery (WBD), Coinbase Global (COIN), Lyft (LYFT), McKesson (MCK).