Stocks Tracking for Longest Loss Streak Since 2022

Welcome to the Schwab Market Update Podcast, where we prepare you for each trading day with

a recap of recent news and a look at what's ahead.

I'm Coletto Claire and here in Schwab's early look at the markets for Friday, March 27.

The weekend approaches with Middle East tensions mounting and investors shying away from risk assets.

Stocks dropped to six month lows Thursday as Iran and the U.S. didn't appear to make progress

in toning down the conflict.

In some ways, it seems to be worsening, with the Strait of Hormuz still closed, mutual

threats being exchanged, and more U.S. troops heading towards the region.

This has Brent Crude back above $105 per barrel, and U.S. try to reels at nearly nine

month highs above 4.4% for the 10-year note amid inflation fears.

Major indexes are on pace with their fifth Strait Lower Week, a streak last seen during

the miserable market year of 2022.

Concerned Ruthers Day that the U.S. might inject ground troops soon.

Their sold growth stocks, including many in the chip sector, as a general risk off

attitude prevailed Thursday, and video shares slid almost 4%.

Chip sector action could again be key to overall sentiment after rising chip shares helped

the market briefly rally Tuesday and Wednesday.

While there's always a chance the weekend could see progress toward peace, market participants

seem more worried about the flip side of that scenario.

Thursday, President Trump extended his pause on a threat to attack Iranian energy facilities

to April 6, CNBC reported.

It was previously scheduled to expire Saturday.

As a publication, it's unclear if this might help ease market tensions or point to possible

carcress in talks.

Before the weekend, there is Friday's session to get through.

No major earnings or data interrupt the market's sharp focus on oil in the war, though there

may be a distraction or two along the way.

Shortly after they open, investors get the final March University of Michigan Consumer

Sentiment report after a tepid preliminary reading.

The initial report pegged headlines sentiment at 55.5%, investors will likely focus on five

year inflation expectations to see if they rose from the preliminary reports 3.2%.

The headline figure earlier this month was the lowest in three months and reflected initial

concerns as the Iran War began.

Several federal reserve speakers took to podiums yesterday after the third large treasury

auction of the week, this time for seven year notes met poor demand.

Soft auction results all week are one factor pushing treasury yields higher and most shorter

term yields rose double digits Thursday.

The two year note yield approached 4% and the 30-year bond yield mirrored 5%, poor demand

for auctioned treasuries likely hints at participants demanding higher yields to protect

them from inflation that some analysts think could spike to 4% this year.

Checking Washington, Congress is expected to enter recess this afternoon while still trying

to reach a bipartisan deal that would fund the Department of Homeland Security or DHS,

except for ISIS migrant removal operations.

As of late Thursday, it was unclear if President Trump would support a deal Congress put forward.

Lines at airports lengthened this week as the Transportation Security Administration

or TSA remains unfunded, causing travel snarls for many and creating headaches for airlines.

However, airlines shares held up relatively well Thursday amid the general market carnage.

One day yesterday, initial weekly jobless claims of 210,000 were near the lower end of

the recent trend and in line with expectations.

It's unclear why jobless claims have remained so low despite a drop in U.S. jobs last

month, though it might reflect fewer workers due to immigration enforcement.

For months, the futures market anticipated between two and three federal reserve rate cuts

this year despite the Fed projecting only one in its December dot plot.

The Fed's updated dot plot this month still projects a cut, but the market has removed

that possibility.

As of late Thursday, odds of rates ending the year below the current target range of

3.5% to 3.75%, sank to nearly zero, according to the CME Fedwatch tool.

The chances of at least one hike this year approached 50%, though odds of a hike at

next month's Fed meeting are just 6%.

The quick reversal in rate cut anticipation drew scrutiny amid ideas that market participants

might have overshot this time to hawkishly.

This reflects concern at the rising cost of oil might trigger a slowdown, forcing the

Fed into rate cuts later this year despite the inflationary impact of gas and diesel.

Jobs growth has been dismal the last six months, including February's drop of $92,000.

The Fats in a pickle with the dual mandate in conflict, said Liz Ann Sonders, chief investment

strategist at the Schwab Center for Financial Research or Schiffer, referring to the Fed's

dual mandate of maximum employment and stable prices.

Next week is light for earnings, other than expected results from consumer bellweather

Nike on Tuesday afternoon.

This is another chance for investors to hear how tariffs are affecting major U.S. firms

heavily exposed to foreign trade.

It's also the final week of the first quarter, meaning window dressing could be an element.

That's when fund managers shift positions before the end of the quarter to add better

performing names and drop worse ones.

This sometimes means higher volatility and possible choppy trading.

Data next week builds toward next Friday's March non-Farm Pables report.

Along the way, investors receive the February job openings and labor turnover survey or

Jolts on Tuesday, ADP Employment on Wednesday, and Challenger Jobcuts Data Thursday.

All these numbers could receive heightened scrutiny on Wall Street amid the war and

the Fed's tribulations.

So will the conference board's consumer confidence reading from March due Tuesday, which could

reflect sentiment during the early weeks of the war?

The twist next week is Friday's market closure for the Good Friday, Holiday on April 3rd,

which means investors won't immediately be able to trade the jobs report.

Under Wall Street, indexes fell sharply Thursday and lost all their gains for the week.

From a technical standpoint, the S&P 500 index remains in a downtrend below its 200-day

moving average of 6,633.

Any close today the low 6,506.48 would make this the fifth straight week of losses for

the index, the longest losing stretch since the spring of 2022 following Russia's invasion

of Ukraine.

The S&P 500 closed yesterday near a long-term support area of 6,475, but may have a long

drop to the next major area of support near 6,174, which corresponds with a 38.2% retracement

of the recent rally.

No major indexes have been fallen out of bed since the war began.

That disguise is bigger moves just below the surface.

The maximum drawdown for the S&P 500 index has been 7% from recent highs, but the average

member has seen a 17% drawdown.

It's even more dramatic in the NASDAQ composite, where the average member has seen a 31% drawdown.

In other words, corrections have been occurring via a process of rotation and churn, versus

indexes falling as monoliths, Sanders said.

Erasing the broadening rally of Tuesday and Wednesday, nearly every S&P 500 sector fell

Thursday, other than energy and utilities.

Info tech dropped 2.5%, and communication services burdened by meta-platforms worst-day

and months dropped 3.4%, discretionary stocks, which appear tightly correlated with the

price of oil, finished red.

In individual trading Thursday, energy stocks gained as oil climbed.

Van Gogh Phillips and Chevron climbed 3% and 1.5% respectively, while fullerro energy

rose 5% and Exxon mobile also rose.

Shares of memory chip firms, including micron and sand disk, fell sharply after Alphabet's

Google introduced an AI model that it said could reduce the amount of memory needed to

run large language models, CNBC reported.

ProSoft fell more than 1%, after the company announced that it's frozen hiring in cloud

and sales units amid cloud pressure, the information reported.

Shares of meta-platforms and Alphabet both slid with a dramatic drop of almost 8% for

meta after a Los Angeles jury found Alphabet's Google unit and meta liable in a landmark

social media addiction lawsuit, whose outcome could influence thousands of similar cases

against the tech companies, Reuters reported.

Gold dropped nearly 4%, and silver fell almost 7%, as traders wearily eyed lack of progress

ending the war.

Mining firm stocks, including free-port Nick Moran, Hecla, and Numaud all fell.

Gold and silver are down double digits since the fighting began, heard by ideas that central

banks might start raising interest rates amid oil-fueled inflation.

The Dow Jones industrial average slid 469.38 points Thursday, or 1.01% to 45,960.11.

A S&P 500 index gave that 114.74 points, or 1.74% to 6477.16, and the Nasdaq Composite dropped

521.74 points, or 2.38% to 21,408.08.

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