Here is Schwab's early look at the markets for Tuesday, June 23.

Tuesday dawns with Wall Street still focused on the Middle East conflict. Yesterday saw progress in talks, helping keep oil prices down, while Treasury yields remain elevated on ideas that the Federal Reserve is in a more hawkish state.

Action today follows Monday's mixed close that featured additional steep losses for SpaceX and the worst day for Alphabet in about a year, putting pressure on the Nasdaq Composite even as most S&P 500 sectors rose.

Earnings news was light on Monday but gains traction today as FedEx reports after the close. This giant shipping firm is often seen as a barometer of business and consumer demand, and shares have climbed steadily this year.

FedEx gave an upbeat view of its business back in March when it last reported, raising annual guidance. Shares rose sharply at the time. Since then, FedEx spun off its freight business into a separate company focused on trucking.

Micron earnings are due Wednesday afternoon after shares of the memory chip company helped lead the tech sector to dramatic gains since Micron's last report. Shares of Micron have fallen the day after earnings five of the last six quarters, though past isn't precedent.

Checking crypto, after retesting its annual lows around the $59,000 level, bitcoin began the week higher, and its recent low seems, for now, to be holding as support. Crypto was weak late last week, likely due to the dollar strengthening on the heels of the Fed meeting.

Data accelerates later this week, especially Thursday morning with readings on first quarter gross domestic product (GDP) and May personal consumption expenditures (PCE) prices.  Components of last month's Producer Price Index (PPI) that map over to the May PCE price report—the Fed's favored inflation meter—suggest a firm print. Only the air transport component declined.

Treasury yields climbed to start the week, extending gains seen after last week's Federal Reserve meeting and sending the 2-year yield to a 16-month high of 4.23%. New Chairman Kevin Warsh took a hawkish spin at the meeting that traders interpreted as a signal of rate hikes ahead. Warsh sounded dovish earlier this year in the lead-up to his appointment but was hawkish in his previous tenure as a Fed policymaker two decades ago.

Crude prices relaxed their grip over the last week and are back to levels that have mostly prevailed over the last decade, in the mid-$70's per barrel for U.S. futures. Traders price in slight drops from here through the end of the year despite stockpiles remaining light after the dramatic drawdown that took the U.S. Strategic Petroleum Reserve (SPR) to levels last seen in 1983. News Monday that the U.S. would allow Iran to sell some crude helped push down prices.

"Inflation could rise near term due to the lagged impact of higher energy prices, but the question is whether prices moderate now that energy prices are off the highs," said Michelle Gibley, director of international equity research and strategy at the Schwab Center for Financial Research (SCFR).  "Some central banks have hiked rates but it’s unclear if this is the start of a new tightening cycle or not."

By early this week, chances of a rate hike by the Fed's September meeting had risen to 70%, according to the CME FedWatch Tool. That's a sharp contrast to ideas heading into this year that the Fed might cut rates, and it's helping flatten the yield curve as shorter-term yields climb versus longer-term ones.

"There've been shifting expectations around the Fed, and it appears they're pretty hellbent about appearing serious on inflation," said Alex Coffey, senior trading and derivatives strategist at Schwab. "The yield curve indicates this belief that they're serious and reflects the impact on long-run expectations for inflation and economic growth, as well."

The latest second quarter gross domestic product (GDP) estimate from the Atlanta Fed's GDP Now tool puts growth at 3%, though that's subject to change as more data filters in. The next update is Thursday.

Speaking of Treasuries, today features a $69 billion auction of 2-year notes that's likely to get close attention from market participants. Any sign of weaker demand at current yields could push yields higher. This comes after both the European Central Bank and Bank of Japan raised rates last week, potentially increasing competition for Treasuries.

Data is on the light side today but features preliminary S&P Global U.S. manufacturing and services readings for June at 9:45 a.m. ET. New home sales line up tomorrow along with crude inventories.

Major indexes had a mixed finish Monday. The Nasdaq Composite took some lumps from weakness in SpaceX, Alphabet and Meta Platforms, while the S&P 500 finished mildly lower and the Dow Jones Industrial Average climbed.

The small-cap Russell 2000 index led all major indexes with gains of 0.81%, crossing 3,000 for the first time and outpacing the broader market so far this year. This despite higher yields that often hinder smaller names on Wall Street. Strength in small caps often reflects optimism about the domestic economy, where smaller companies tend to have more of their sales.

Though the S&P 500 fell, seven  of 11 S&P 500 sectors rose Monday, reflecting the S&P 500's heavy weighting toward the largest tech and discretionary stocks. Cyclical sectors including industrials and financials sported healthy gains Monday, though energy shares led the day despite falling oil prices. The S&P 500 Equal Weight Index, which weighs all components the same, gained slightly and far outpaced the better-known S&P 500.

Market breadth, which ticked up to more than 60% of S&P 500 stocks trading above their 50-day moving average earlier this month, is back near 53%'s now as some of the rotation out of tech eased recently. A day like Monday with a majority of sectors rising could suggest a return toward broader positioning, but one day isn't a trend.

The lower overall breadth coincides with higher Treasury yields. The pattern seems to be that when yields fall, rotation heads into more cyclical sectors like financials and industrials, while yields at 4.5% or above for the 10-year note send investors back toward tech. Upside call buying among retail traders continued to look strong in chips late last week at options expiration, but there appeared to be some hedging by institutional investors.

Among individual movers Monday, some memory chip names started the week on a positive note. Shares of Micron rolled up nearly 7% gains ahead of its earnings tomorrow, accompanied by solid upward moves in shares of SanDisk after Micron's South Korean rival SK Hynix rose more than 5% earlier.

Beyond the memory side of the chip market, shares of Intel and Taiwan Semiconductor also gained. Nvidia hosts its shareholder meeting Wednesday.

Super Micro Computer (SMCI) jumped more than 15% after getting an upgrade to buy from GF Securities. Another boost came from the company announcing a data center product designed to help deploy Nvidia's Vera Rubin NVL4 platform.

In other corporate news, today kicks off Amazon's Prime Day, a possible consumer demand barometer over the next four days. Weakness for Amazon might translate into pressure on other retailers, while strength could provide the retail sector a tailwind. Bank of America expects the event to generate $21.6 billion in goods sold, Reuters reported.

SpaceX fell sharply, down 16%, leaving shares just above last week's low point of just below $150. Though not a member of the S&P 500, the stock is expected to get fast-track approval to the Nasdaq-100®, Reuters reported, perhaps within a month. KeyBanc initiated coverage of the stock with a "sector weight" rating, and SpaceX confirmed its first-ever bond issuance, according to Yahoo Finance.

Communication Services was by far the worst-performing S&P sector, diving more than 4% amid weakness in Alphabet. Shares toppled 5% after Reuters reported that a well-known scientist planned to leave Google DeepMind to join AI startup Anthropic. This followed the exit of another key AI leader from the company last week to join OpenAI.

Some energy stocks climbed despite a moderate drop in the price of crude oil. U.S. crude futures traded below $76 per barrel on news of progress over the weekend in peace talks between Iran and the U.S., specifically on the status of the conflict in Lebanon and the establishment of a line of communications between Iran and the U.S. to avoid incidents in the strait, Barron's reported.

Chevron rose almost 1% after announcing a 20-year agreement with Microsoft to provide electricity to a data center Microsoft is building in Texas.

Playboy rose 2% after the company announced it was repurchasing 16.6 million shares.

Some consumer stocks, including home builders, clothing and athletic retailers, and automakers felt pressure Monday, possibly due to rising Treasury yields and worries about future rate hikes.

IonQ rose 3% on news President Trump would sign an executive order this week to protect quantum research, Briefing.com reported.

Apogee Therapeutics soared 47% on news it has entered a definitive agreement to be acquired by AbbVie for $135.11 per share, Briefing.com reported.

The Dow Jones Industrial Average® ($DJI) climbed 148.01 points (+0.29%) Monday to 51,712.71; the S&P 500 Index ($SPX) lost 27.79 points (-0.37%) to 7,472.79, and the Nasdaq Composite® ($COMP) fell 351.33 points (-1.33%) to 26,166.60.