Schwab Market Update

Hot Core PCE Data Keeps Stocks Down

March 28, 2025 Joe Mazzola

Headline Personal Consumption Expenditures hit in line with expectations, but core data that excludes food and energy prices were slightly hot, pushing equity futures lower.

Published as of: March 28, 2025, 9:15 a.m. ET

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The markets	Last price	Change	% change
S&P 500^® index	5,693.31	-18.89	-0.33%
Dow Jones Industrial Average^®	42,299.70	-155.09	-0.37%
Nasdaq Composite^®	17,804.03	-94.98	-0.53%
10-year Treasury yield	4.31%	-0.54	--
U.S. Dollar Index	104.37	+0.03	+0.04%
Cboe Volatility Index^®	19.28	+0.59	+3.16%
WTI Crude Oil	$70.06	+$0.14	+0.20%
Bitcoin	$85,500	-$1,955	-2.24%

(Friday market open) Major index futures remained slightly down after February's core Personal Consumption Expenditures (PCE) price index came in a bit hotter than expected at 0.4% monthly and 2.8% annually. Core excludes volatile food and energy prices, and analysts had predicted 0.3% and 2.7% rises, respectively.

Headline figures for PCE—0.3% monthly and 2.5% annually—met expectations. The monthly core data was up slightly from 0.3% in January and flat with the 0.3% headline number. Annually, core PCE had a similar slight uptick from 2.7% in January, while the headline figure stayed flat from January's 2.5%.

Personal income rose 0.8% month over month, double analyst expectations for a 0.4% increase and slightly up from the 0.7% rise in January. Employment data hits next on Tuesday with the release of the Job Openings and Labor Turnover Survey (JOLTS), along with ISM Manufacturing PMI.

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Three things to watch

Conditions for a bounce back? A washout in sentiment, potentially oversold conditions, and thrusts of breadth: Collectively, these may be conditions for a bounce back in equities, according to Kevin Gordon, director, senior investment strategist at Schwab. The S&P 500's 50-day moving average rolled over and closed the gap with the 200-day moving average, so the coming weeks will be crucial in determining whether the market is rejecting the notion of a bear market, Gordon said Thursday. "The fact that we have only seen a correction at the index level while the Mag 7 has already fallen by 20% is a critical step so far," he said. "So a continued, broad-based recovery from here—not just in terms of the index's price, but in member breadth—would bode well for the long-term, as it would signal investors are not overly reliant on a handful of mega caps."
Emerging stocks outperforming U.S. … again: So far in 2025, emerging market stocks are outperforming U.S. stocks 6% to -2%, similar to the outperformance numbers during the first five quarters of President Trump's first term, according to Jeffrey Kleintop, chief global investment strategist at Schwab. Will history repeat itself? It may depend on the country: China, Korea, and Brazil have produced double-digit returns, while India and Taiwan are negative. Tariffs may not have an impact on the two largest components of the emerging markets index in China, where they're priced in, and India, which doesn't export much to the U.S. If tariffs are less impactful, "the dollar could continue to slump, supporting EM currencies," Kleintop said.
Dampening optimism on IPOs? A company planning a closely watched initial public offering (IPO), CoreWeave, cut the number of shares it plans to sell in the IPO and announced it'll sell them for $40 per share, under the $49 to $55 range it originally planned. CoreWeave is an AI cloud computing startup, backed in part by Nvidia (NVDA), and its IPO filing had been considered a potential indicator of the U.S. IPO market.

On the move

Dollar Tree (DLTR) corrected 1.17% ahead of the open Friday after an 11.18% rise Thursday on positive Q4 results and its decision to sell its Family Dollar business to Brigade Capital Management and Macellum Capital Management for $1.01 billion.
U.S. Steel (X) was up 4.51% on news that it and Nippon Steel are in talks with the Trump administration to try to preserve the merger, Semafor reported.
General Motors (GM) showed a slight dip in premarket trading at 0.81% after the latest tariff news continued the stock's downturn another 7.36% Thursday. Ford (F) showed a slight gain of 0.20% early Friday following a 3.88% drop. Tesla (TSLA) was up 0.58%.
Petco (WOOF) inched up 0.62% premarket after jumping 31.56% Thursday on expectations for boosted profitability.
Super Micro Computer (SMCI) regained 0.66% in premarket trading after a 6.26% decline Thursday. Nvidia was up slightly at 0.19% after a 2.05% loss a day earlier, while Advanced Micro Devices (AMD) continued a 1.27% loss after a 3.21% decline Thursday.
Lululemon (LULU) was down 10.99% Friday morning following a small gain Thursday after Q4 earnings beat expectations but its guidance for revenue came in under analyst projections.
GameStop (GME) traded up 2.81% ahead of the open after it gapped down a dramatic 22.11% Thursday as investors digested news that it issued debt to fund its planned purchases of bitcoin as a treasury reserve asset.
AppLovin (APP) was up 9.89% premarket, regaining some of the 20.12% drop that came after Muddy Waters Research announced a short on the stock because it believes APP may be violating its terms of service related to how it collects and structures user IDs.
Winnebago (WGO) was flat before the open after jumping 8.18% Thursday by the close from Q2 earnings that were better than expected, even though it lowered its full-year guidance because of potential headwinds like interest rates, consumer sentiment, and dealership inventory.

More insights from Schwab

Inflation had stabilized in 2024 after recent highs in 2022. But by early 2025, many investors had renewed concerns about inflation in the face of potential trade wars, government policies on immigration, and tax changes. Schwab recently discussed how it could impact your investments in "How Can Investors Prepare for Inflation?"

The week ahead

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

March 31: Chicago PMI and Dallas Fed Manufacturing Index and earnings from PVH (PVH).
April 1: ISM Manufacturing PMI and JOLTs job openings.
April 2: ADP employment change, factory orders, and earnings from RH (RH) and BlackBerry (BB).
April 3: ISM Services and earnings from Conagra (CAG), Acuity Brands (AYI), and Lamb Weston (LW).
April 4: Nonfarm payrolls, unemployment rate, and expected earnings from JPMorgan Chase (JPM), American Express (AXP), and Bristol-Myers Squibb (BMY).

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