Here is Schwab's early look at the markets for Wednesday, September 30:
An important trail marker on the path toward next month's Federal Reserve meeting comes into focus today as investors await the August Personal Consumption Expenditures (PCE) price index.
Consensus for the 8:30 a.m. ET report is 0.3% monthly and 3.3% annually for core PCE, excluding food and energy. Non-core PCE is seen at 0.4% and 3.7%, though that includes the energy market that was ascendant that month.
A Fed policymaker said last week he'd like to see 0.2% or less core monthly PCE growth.
"We believe the Fed will hike at least one more time this year and maybe again later this year or early next year," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "The outlook largely depends on the breadth and pace of inflation. PCE will be important and could help inform the future path of the Fed funds rate."
Heading into PCE, chances of a rate hike next month stood at 51%, according to the CME FedWatch Tool, down from 70% a day earlier.
Odds fell after the August Job Openings and Labor Turnover Survey (JOLTS) came in below expectations at 7.08 million and home prices rose a surprising 2.5% in July. Both suggest difficult circumstances for consumers, perhaps putting the Fed more on the dividing line between yes and no.
Consumer confidence from the Conference Board in September likely played a part, too, coming in at 81.9, well below 88.6 in August.
Beyond the PCE, market participants will closely study today's August personal spending and income data, seen up 0.7% and 0.4%, respectively, after smaller rises for both in July.
Tomorrow brings the September Challenger job cuts report before the open. The August reading of approximately 53,000 didn't raise many eyebrows, but analysts expect a jump to nearly 80,000 in September. That's not historically high, but it's the trend that matters. September layoffs a year ago were just 54,000.
More important is Friday's September nonfarm payrolls data, with consensus at 84,000 jobs created. That's roughly half of August's surprisingly firm 162,000, but revisions to August and any earlier data might be enlightening.
A very strong jobs report might raise rate hike odds for both October and December, but it would likely take a very weak report to send hike chances, or Treasury yields, much lower.
The 10-year Treasury note yield topped 5.25% early this week for the first time since 2007 and sits not far below that year's peak near 5.32%. It inched up again Tuesday despite U.S. crude falling below $90 per barrel.
However, the 2-year note yield fell slightly as hopes grew that the Fed might get less hawkish thanks to the soft data. The U.S. government's surprise release of 40 million barrels of oil from inventories kept crude under pressure.
Lower oil initially gave stocks a lift Tuesday after the Wall Street Journal reported that crude flows out of the Middle East had reached 80% of pre-war levels. This may be close to what's needed in the near term, considering global demand is down sharply since the war began, the newspaper reported.
Prices, however, haven't dropped for drivers or transport firms as damage to refineries hits production of products made from oil. The Trump administration's consideration of a diesel export ban likely wouldn't help matters.
"A diesel export ban would only provide temporary relief at best," said Michelle Gibley, director of international equity research and strategy at SCFR. "Every barrel of oil produces gas, diesel and jet fuel. Stopping production of one product stops all of them. With pipelines full, refineries would have to shut down, resulting in an almost simultaneous increase in gas prices, trading one problem for another."
Stocks exposed to the diesel market had a mixed showing Tuesday.
Turning to earnings, memory chip maker Micron reports after the close and might help set direction on Thursday. Analysts expect earnings per share of $31.61 on revenue of $51.1 billion. That would represent astonishing 351.3% annual revenue growth, highlighting the importance of memory chips in the AI buildout and recent high memory prices.
Micron shares could be volatile after the report, with the options market projecting a 9% move.. The rest of the AI market could follow Micron, likely moving major indexes in pre-market trading Thursday. The full impact, however, might not be felt until Thursday's regular session begins and volume reaches normal daily levels.
Volatility could also be up in general today as it's the final day of the quarter. This can cause some profit taking.
Major indexes stayed under the weather Tuesday, but not dramatically. It appears participants might be lying low awaiting today's PCE data, Micron, and Friday's payrolls report.
Four of 11 S&P 500 sectors climbed Tuesday, improving from three the day before. Communication services roared back and industrials also made a decent showing, while the defensive utilities sector took top honors. Energy fell most as oil sank.
The percentage of S&P 500 stocks trading above their 50-day moving averages—an important metric for market breadth—is weak at 24% and has fallen almost constantly from the mid-August peak above 70%. The low this year was in March, just below 18%.
Checking individual performers Tuesday, despite fresh AI concerns after OpenAI's decision to halt its latest ChatGTP model due to safety concerns, AI infrastructure and chip stocks generally rose. The rally gained steam later in the day after OpenAI announced enterprise-focused "Dots" AI agents. Some software shares fell on associated competition worries.
Carnival Cruise Lines soared 13% and Royal Caribbean climbed 7%, both helped by strong earnings from Carnival. Strong demand helped offset rising fuel costs, The Wall Street Journal reported.
Nucor slipped another 3.4% Tuesday as the steel sector suffered competition concerns after President Trump announced a $15 billion steel plant planned for Iowa.
Fair Isaac plummeted more than 26% as Federal Housing Finance Agency Director Bill Pulte said a new mortgage pricing structure will allow direct competition to Fair Isaac's FICO score, Barron's reported.
SpaceX rose 2.6% after successfully launching its Starship to orbit Monday. However, the ship only made it through two orbits instead of the six planned due to engine problems at launch.
Carmax surged almost 5% as earnings impressed.
Bank stocks mostly fell and the financial sector is down more than 6% in September. Worries percolated lately about investment banking demand and a flattening yield curve.
Summit Therapeutics climbed 6% as Reuters reported AstaZeneca would invest $2 billion in the company and collaborate on cancer studies.
The Dow Jones Industrial Average® ($DJI) slipped 131.59 points (-0.26%) Tuesday to 51,349.92; the S&P 500 Index ($SPX) lost 12.85 points (-0.17%) to 7,670.84, and the Nasdaq Composite® ($COMP) gave back 22.84 points (-0.09%) to 26,797.54.