Schwab Market Update

Published as of: June 10, 2025, 9:05 a.m. ET

(Tuesday market open) After going zero for two yesterday as the first day of Apple's (AAPL) Worldwide Developers Conference disappointed investors and trade talks brought no tangible sign of progress, investors get another crack at both today. Talks continue between the U.S. and China, and Apple's conference enters day two after lack of insight into the Siri AI delay hurt shares Monday.

Data is light today and major indexes were little changed early on, but tomorrow's May Consumer Price Index (CPI) could provide a morning perk-up for this sleepy market. Analysts expect 0.2% headline CPI growth and 0.3% core growth (core extracts volatile food and energy prices). That's up from 0.2% in April. Annual CPI is seen rising to 2.5% from 2.3%, according to FactSet. One question is how soon any tariff-related price increases show up in the data, an important consideration ahead of the Federal Reserve meeting next week. "Recent inflation prints have generally shown a moderation in price increases, but as time passes the effects of the tariffs should work their way into the data," the Schwab Center for Financial Research said.

Tomorrow also brings a 10-year Treasury note auction, with a 3-year note auction today as an appetizer. Light demand could raise yields, which sometimes hurts stocks. The S&P 500 index (SPX) kept its head above 6,000 yesterday thanks in part to semiconductor strength amid hope that the U.S. and China might be able to agree on steps to loosen U.S. chip export restrictions. Major indexes remain at levels suggesting investors don't see many near-term headwinds and think the July 9 tariff extension deadline and July 4 U.S. budget deadline will get ironed out on time.

1. Retail investors seem less bullish on tech, Nvidia: The Schwab Trading Activity Index^™ (STAX) decreased to 39.68 in May, down from 41.18 in April. The index, which analyzes retail investor stock positions and trading activity from Schwab's client accounts, showed that AI giant Nvidia (NVDA) was the biggest net-sell by Schwab clients, likely accounting for a significant portion of the overall STAX drop even in a month when the S&P 500 index rose 6%. Info tech and communication services were the biggest net-sell sectors, while clients were net buyers in health care. Beaten-down shares of UnitedHealth (UNH) were a large net-buy in the May STAX period. Meanwhile, Palantir (PLTR) seemed to replace Nvidia on the popularity list among retail traders. Overall, the report indicated that clients are rotating out of big tech names and looking for opportunities in stocks they consider oversold. Which in turn could imply that buying of big tech names that took major indexes back to three-month highs in recent days might reflect institutional, not retail, interest. This could suggest institutional buyers trying to play catchup as the end of the quarter approaches to make sure they own some of the winners, even as retail investors rotate out of big names ahead of the looming expiration of President Trump's tariff reprieve. This sets up some potentially interesting trading activity as the end of the month and quarter approach.
    
2. Can spring calm in volatility last? If there's a common theme over the last six weeks besides the V-shaped recovery in stocks, it could be the steady descent of volatility. The Cboe Volatility Index (VIX) dipped under 17 recently for the first time since March. That's well below the historic average of around 20 that can signal more fear ahead. However, the futures structure is in contango, meaning the spot price is lower than future contracts, indicating at least some trepidation. Maybe not enough, however, considering President Trump's budget deadline is July 4 and his tariff delay expires July 9. The spread between realized and implied volatility has been crushed, perhaps a sign of complacency because going long on volatility hasn't worked. However, hedgers may be tempted to dip their toes back to set themselves up for possible disappointment if the budget and tariff talks run into trouble. Many near-term developments could lead to more hedging activity, and any kind of catalyst could have a profound effect on the market given where things stand now on trade and U.S. budget talks.
    
3. Labor force participation drop raises questions ahead of FOMC: Jobs are high on the Federal Reserve's priority list as the Federal Open Market Committee (FOMC) prepares to decide on rates and release fresh economic and rate projections a week from tomorrow. Despite the market's generally favorable response to last week's nonfarm payrolls report, data under the hood raised eyebrows among investors and perhaps at the central bank. Notably, the overall labor participation rate fell to 62.4% from 62.6% in May from April. That's a big drop, as moves in this category are generally 0.1% to 0.2%. Without the participation decline, unemployment might have been higher than the report's 4.2% unchanged figure for May, since unemployment only tracks people in the labor force, not those who've dropped out. Also, the government's survey of households showed 696,000 fewer people employed last month. Fed Chairman Jerome Powell might have to address what caused the participation and household survey declines at his press conference next Wednesday, and what that might mean for Fed policy if trends continue.

• Caseys General Stores (CASY) popped 10.4% in pre-market trading. The retailer easily beat analysts' estimates for quarterly earnings and revenues as sales at stores open a year or more rose 1.7%, not including fuel. It expects even stronger "inside" same-store growth of 2.5% in fiscal 2026, and increased its dividend.
   
• McDonald's (MCD) fell 1.4% after being downgraded to Sell from Buy at Redburn Atlantic, which sees pressure on the business from weight-loss drugs. This follows a downgrade yesterday from Morgan Stanley (MS) to Equal-Weight, citing headwinds including lower personal incomes, health and wellness considerations, and challenges in the international business.
   
• Tesla (TSLA) climbed 2.5% in pre-market trading. Media reports pointed to signs of détente in the Elon Musk/Donald Trump battle. Investors, meanwhile, are starting to consider Tesla's coming quarterly deliveries report expected in early July. Wall Street sees second quarter deliveries of 412,000, down 7% from a year ago, Barron's noted.
   
• Taiwan Semiconductor Manufacturing (TSM) climbed 1.8% ahead of the open after the chip manufacturer reported May revenue rose 40% on strong demand for AI chips.
   
• J. M. Smucker (SJM) fell 8.4% ahead of the open. Earnings and revenue topped Wall Street's consensus but its fiscal 2026 forecast appeared to disappoint, with an earnings range below the average Wall Street estimate. The earnings release cited "a dynamic and evolving external environment," including tariffs.
   
• Bitcoin (/BTC) climbed nearly 1% in the early going to claw back above $110,000, near all-time highs, and shares of crypto-related names like Coinbase Global (COIN) and Strategy (MSTR) were up about the same.
   
• Odds of a June rate cut are zero and odds of a July cut are less than 15%, according to the CME FedWatch Tool. September rate cut odds remain near 63%.

Debt ceiling primer: With budget battles in Congress, the U.S. debt ceiling is a hot topic now. What is it, how does it work, and what impact would a debt default have on U.S. stocks and Treasuries? These issues and more are addressed in the latest update from Michael Townsend, managing director, legislative and regulatory affairs at Schwab. "Congress is aware of the approaching deadline and the importance of raising the debt ceiling and avoiding a default," Townsend wrote. "The 'One Big Beautiful Bill Act' that was approved by the House on May 22 includes a $4 trillion increase in the debt ceiling. That should be enough to ensure that the debt ceiling is not an issue again until 2027."

The S&P 500 index (SPX—candlesticks) sits just above the psychological 6,000 level after reaching it Friday for the first time since February. Key support is near the 200-day moving average (blue line) now just below 5,800, and if that holds, positive momentum could continue from a technical perspective. The 50-day moving average (red line) fell below the 200-day in mid-April in what's often seen as a technical warning, but the market has spent most of the time since then advancing. If the 50-day reclaims primacy over the 200-day, that would likely be seen as a bullish development, but would take a long rally to get there. The SPX Relative Strength Index (RSI—chart below main chart) hovers near 65, slightly below the 70 level that some see pointing toward overbought conditions.

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

June 9: Expected earnings from Casey's General (CASY).
June 10: Expected earnings from GameStop (GME) and Stitch Fix (SFIX).
June 11: May Consumer Price Index (CPI) and expected earnings from Chewy (CHWY).
June 12: May Producer Price Index (PPI) and expected earnings from Adobe (ADBE).
June 13: Preliminary June University of Michigan Consumer Sentiment.