Schwab Market Update

Stocks Cool Heading into Fed, Awaiting Trade News

May 6, 2025 Joe Mazzola

Lack of trade news, Ford suspending guidance, and a drop in Palantir all weigh ahead of the Fed meeting. Treasury Secretary Bessent testifies to Congress and AMD reports later.

Published as of: May 6, 2025, 9:17 a.m. ET

Listen to this article

Listen here or subscribe for free to the Schwab Market Update in your favorite podcast app.

The markets	Last price	Change	% change
S&P 500^® index	5,650.38	-36.29	-0.64%
Dow Jones Industrial Average^®	41,218.83	-98.60	-0.24%
Nasdaq Composite^®	17,844.24	-133.49	-0.74%
10-year Treasury yield	4.33%	-0.01	--
U.S. Dollar Index	99.47	-0.36	-0.36%
Cboe Volatility Index^®	24.84	+1.20	+5.30%
WTI Crude Oil	$58.69	+$1.56	+2.68%
Bitcoin	$93,828.29	-$706.29	-0.75%

(Tuesday market open) Stocks headed south for the second straight day after a nine-session win streak ended Monday. Lack of progress on trade deals, Ford's (F) withdrawal of guidance, and a post-earnings slide by Palantir (PLTR) are all on today's radar, with Advanced Micro Devices (AMD) lined up to report later and Treasury Secretary Scott Bessent scheduled to testify to the House Appropriations Committee.

The Federal Reserve meeting kicks off this morning and a rate decision comes tomorrow, but no change is expected. Still, Fed Chairman Jerome Powell's press conference Wednesday afternoon is worth tracking for fresh perspective. "The Fed will likely try to signal they are on hold for the time being and want to wait for more clarity about how tariffs will or won’t impact the economy," said Cooper Howard, director, fixed income strategy at the Schwab Center for Financial Research. "The market’s projecting three cuts this year, which has been pared back from earlier expectations."

Even before the meeting ends, yields are under scrutiny as a $42 billion 10-year Treasury note auction looms today. Yesterday's $58 billion 3-year note auction drew decent demand, Briefing.com noted, but yields rose as U.S. services data outpaced expectations and the prices paid component rose to its highest level since January 2023, something the inflation-wary Fed likely noticed.

To get the Schwab Market Update in your inbox every morning, subscribe on Schwab.com.

Three things to watch

1. Mega cap earnings assessed: Six of the Magnificent Seven have reported, leaving investors to read the tea leaves. Five beat Wall Street's expectations, but Tesla (TSLA) missed. Investors gave results a mixed review, rewarding shares of Alphabet (GOOGL), Meta Platforms (META), and Microsoft while punishing Apple (AAPL) and Amazon (AMZN). While so-called hyperscalers like Meta and Alphabet reconfirmed plans to keep up their huge AI spending, there are cracks in the cloud business at Amazon, and Microsoft and Alphabet may be gaining share. The results left investors with questions, including whether Amazon's slowing cloud business is a problem, if Apple and Tesla can dodge heavy tariff damage, and whether digital ad spending can continue surging. In that category, AI enhancements seem to be paying early dividends. "The sentiment around the AI secular growth story feels like it's been resurrected, and the market seems more sanguine around companies' ability to navigate the potential impact of tariffs," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research.

2. Trade data mulled as tariffs take hold: China's April trade numbers out Thursday will be the first to reflect 145% U.S. tariffs. "China's trade report for April will probably show an initial hit from its escalating trade war with the U.S.," said Jeffrey Kleintop, chief global investment strategist at Schwab. "Shipping data suggests that a drop in shipments to the U.S. didn't occur until the final 10 days of the month, suggesting the full impact of tariffs may not show up until the May data is reported." Imports at the Port of Oakland jumped more than 10% in March from February, and the Port of Long Beach had its best first quarter on record as imports surged 25% in March. But those likely reflected "pull-ahead" demand before trade barriers. Data for April is on the way and worth monitoring. Also, Bloomberg reported today that the European Union plans $100 billion in retaliatory tariffs if talks with the U.S. fail but wants to kickstart talks this week.

3. The Schwab Trading Activity Index (STAX) plunged in April to its lowest reading in two years as Schwab clients were net sellers in every sector but energy. The heaviest selling was in info tech, consumer staples, and consumer discretionary. Clients shied from individual stocks during April even as the S&P 500 and Nasdaq Composite boomeranged double digits from the April lows. Amid continued volatility in the markets, STAX showed a broad pattern of clients rotating out of equities and gravitating towards fixed income and broad-based ETFs as potentially lower-risk alternatives to individual names. Clients were generally risk-averse, going back to names they know and companies they tend to turn to in tough times. Popular names bought during the April STAX period by Schwab clients included Nvidia (NVDA), Amazon, and Tesla, while Alibaba (BABA), MicroStrategy (MSTR), and Boeing (BA) were the names with the largest net-selling.

On the move

- Ford (F) fell 2.5% ahead of the open. Earnings from the automaker late Monday exceeded analysts' expectations, but Ford suspended its 2025 guidance, saying tariffs could take a $1.5 billion toll. The company said given what it called "material near-term risks, especially the potential for industrywide supply chain disruption," it's suspending guidance.

- Palantir (PLTR) fell 7.2% this morning despite earnings that met analysts' expectations and a rise in full-year revenue guidance to 36% growth, better than analysts had foreseen. However, guidance appeared to miss "whisper" numbers of some market bulls and the stock has been on a roll, up nearly 60% in the last month, likely leading to today's selling pressure.

- Skechers (SKX) flattened early today after jumping more than 24% yesterday on news that the company will be acquired by 3G Capital, which plans to take Skechers private.

- Clorox (CLX) dropped 3.2% in pre-market trading as earnings missed Wall Street's estimates and revenue fell. The company also lowered its 2025 sales forecast, citing "recent changes in the macroeconomic and geopolitical environment."

- Advanced Micro Devices fell slightly ahead of earnings later today. AMD, a large AI chip firm, follows last week's mega-cap earnings that saw AI spending plans reconfirmed despite tariffs. Demand for other types of chips, like ones in cars and phones, might suffer if the economy slows, and AMD shares are down 17% this year.

- Him & Hers Health (HIMS) dropped 7.2% despite earnings that surpassed analysts' consensus. However, guidance wasn't as strong as analysts had expected in terms of second quarter revenue.

- DoorDash (DASH) fell 5% in pre-market trading after first quarter revenue rose 21% but missed expectations. The company also announced it was making a $1.2 billion all-cash acquisition of restaurant booking platform SevenRooms.

- Coinbase Global (COIN) fell 1.4% after the crypto-related firm got downgraded by Monness, Crespi, Hardt to Neutral from Buy ahead of the company's quarterly results Thursday. The analyst said "near-term caution" is appropriate going into earnings.

- Apple sank 0.75% after a 3% decline yesterday amid growing tariff fears. Apple's latest earnings show the company is eating additional costs on goods imported to the U.S., but this decision is unlikely to last forever, The Wall Street Journal reported. Also, investors are on edge awaiting the May 15 filing by Berkshire Hathaway (BRK.B), which could reveal if Warren Buffett sold more shares.

More insights from Schwab

What to watch as tariff negotiations proceed: "Frameworks for deals could be forthcoming but may not end uncertainty," Schwab's Kleintop said in his latest analysis. "Talks with India, Japan, and South Korea have been described as making good progress. However, these frameworks, or memorandum of understanding (MOUs), may describe the topics to be addressed in eventual deals and may not have a lot of details. This could set up an extension of the 90-day pause past July 9, keeping a cloud over corporate decision-making and markets."

90-second view: In this week's Schwab Weekly Market Outlook, Schwab's Kleintop previewed earnings due tomorrow from Walt Disney (DIS). "Disney earnings may show if worsening sentiment toward the U.S. has started to hit its theme park and cruise businesses amid a fall in visitor arrivals to the U.S. and global boycotts of American products," he said.

Chart of the day

The benchmark 10-year Treasury yield, which fell toward 4.1% last week, is back above 4.34% and its 200-day moving average near 4.22%. It's still down from peaks above 4.5% last seen in April but also in February. It was below 4% in early April.

Data sources: Cboe. Chart source: thinkorswim® platform.

Past performance is no guarantee of future results.
For illustrative purposes only.

A week ago, investors felt relieved when the 10-year Treasury yield (TNX:CGI—candlesticks) dipped toward 4.1% from highs near 4.6% in April. The drop put the closely watched indicator back under its 200-day moving average (blue line) and eased concerns that investors were turning away from U.S. assets like fixed income and the dollar. Now it's heading up again, and a move above 4.4% might get investors concerned. Recent U.S. data have exceeded expectations, including jobs and ISM Services PMI^® report yesterday, which also raised inflation concerns. Also, investors are pushing hopes of a first rate cut back to July from June. All this is weighing on Treasuries and pushing yields up.

The week ahead

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

May 7: FOMC rate decision and expected earnings from Johnson Controls (JCI), Uber (UBER), Walt Disney (DIS), AppLovin (APP), Arm Holdings (ARM), and Occidental Petroleum (OXY).
May 8: Q1 Productivity-preliminary and expected earnings from ConocoPhillips (COP), Anheuser-Busch (BUD), Shopify (SHOP), Warner Bros. Discovery (WBD), Coinbase Global (COIN), Lyft (LYFT), and McKesson (MCK).
May 9: Expected earnings from Enbridge (ENB).
May 12: Expected earnings from Hertz (HTZ).
May 13: April CPI and core CPI and expected earnings from JD.com (JD) and Under Armour (UAA).

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Schwab Center for Financial Research ("SCFR") is a division of Charles Schwab & Co., Inc.

Supporting documentation for any claims or statistical information is available upon request.

Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.

For illustrative purpose(s) only.

Investing involves risk, including loss of principal.

Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.

The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.

Digital currencies [such as bitcoin] are highly volatile and not backed by any central bank or government. Digital currencies lack many of the regulations and consumer protections that legal-tender currencies and regulated securities have. Due to the high level of risk, investors should view digital currencies as a purely speculative instrument.

Cryptocurrency-related products carry a substantial level of risk and are not suitable for all investors. Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment in the fund. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Some cryptocurrency-related products use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency, which may result in unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended. Please read more about risks of trading cryptocurrency futures here.

The Schwab Trading Activity Index (STAX) is a proprietary, behavior-based index created by Charles Schwab designed to indicate the sentiment of retail investors’ portfolios. It measures what investors are actually doing, and how they are actually positioned in the markets. The STAX is not a tradable index. The STAX should not be used as an indicator or predictor of future client trading volume or financial performance for Schwab.

0525-0131