Here is Schwab's early look at the markets for Wednesday, March 25.

Stocks keep heading whichever direction crude oil goes, proven again yesterday when Wall Street's Monday rally quickly hit a wall as crude rebounded amid a new round of missile strikes by Iran. Lack of detail on rumored peace talks and denials of those talks by Iran itself lend a "show me the money" aspect to trading, and keep volatility elevated.

"Markets are in an accelerated price discovery mode as investors sift through new incoming data points related to the Middle East conflict," said Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research, or SCFR. "It’s difficult to be an efficient market with such a high frequency of data points that can often contradict each other, and this is what creates the elevated day-to-day volatility."

Though yesterday was another washout for the major indexes, tech stocks took the main blow, while underneath there was some resilience. The S&P 500 Equal Weight Index, which weighs all components the same, gained ground. It wasn't enough to overcome weakness in major names like Nvidia, Alphabet, and Amazon.com.

Fresh headlines about private credit firms limiting investors' redemptions didn't help confidence on Wall Street yesterday. This has been a running theme for some time, reflecting investor nerves as they try to remove funds from more aggressive assets.

Apollo Global Management initially fell yesterday when Bloomberg reported that its business development company is curbing redemptions from one of its largest non-traded private credit funds for retail investors. Shares recovered to finish slightly higher. Ares Management fell almost 1%, however, as the Financial Times reported it's capped withdrawals from a $10.7 billion private credit fund.

The private credit concerns extended into the software sector yesterday, hurting Salesforce and Microsoft.

The Cboe Volatility Index, or VIX, which briefly fell below 25 Monday after President Trump posted that the U.S. and Iran are having "very good and productive conversations,", stayed above 26 on Tuesday and was near 27 by the closing bell, territory typically considered a sign of caution and increased hedging activity.

Bond yields rebounded Tuesday, carried higher by rising crude oil prices that fed inflation fears. Federal Reserve speakers are back in view after last week's rate pause, with Fed Gov. Michael Barr making remarks last night and Fed Gov. Stephen Miran scheduled to speak later this afternoon. Miran was the only policymaker to vote for a rate cut last week, something he's consistently done since being appointed by President Trump after previously serving in the Trump administration.

Today brings February import and export prices data before the open and the weekly Energy Information Administration report on crude oil inventories may get a passing glance. Both could see elevated interest from investors in these times of crude oil supply issues caused by the war, though the import and export price data was collected last month before conflict began.

In data yesterday, the S&P Global March Purchasing Manager’s Index (PMI) showed U.S. Composite PMI at 51.4. That's above the 50 needed for expansion but the lowest since last April and the second straight month of slower growth. Composite includes manufacturing and services. New orders softened while prices climbed, not a good combination.

"Input prices in the preliminary PMIs rose by the sharpest rates in years," said Michelle Gibley, director of international equity research and strategy at SCFR. "Some manufacturing companies are already raising prices, not wanting to get caught off guard. The longer energy supplies are disrupted and prices stay elevated, the more inflation could become engrained in inflation expectations and change corporate and consumer behavior."

Other data yesterday also wasn't market-friendly and pushed yields higher. The U.S. government reported that fourth quarter unit labor costs rose 4.4%, above the previous estimate of 3.1%. Productivity growth got revised down to 1.8% from the prior 2.5%.

There've been hopes that the rise of AI could lift productivity, allowing the economy to grow faster with less inflation and possibly fewer rate hikes. While one report isn't a trend, yesterday's report doesn't suggest that happening at least in the fourth quarter after very solid 5.2% productivity growth in the third quarter.

The unit labor cost rise was the highest in any quarter since the first quarter of 2025 and up from a negative rate in the second quarter of last year and just 1% in the third quarter. The increase in unit labor costs reflected higher hourly compensation.

As of late Tuesday, odds of a rate cut before the end of the year fell below 4% according to the CME FedWatch Tool, while odds of at least one hike were around 37%. A hike is unlikely next month but not out of the question with 8% odds. The futures market now prices in the highest chance—nearly 60%--of rates remaining steady between 3.5% and 3.75% the rest of 2026.

A 2-year Treasury note auction on Tuesday saw "poor" demand, according to Briefing.com, one possible reason the 2-year Treasury yield spiked 10 basis points to 3.93% by late in the session, the highest since late July. That compared with a six-basis point rise for the benchmark 10-year note, narrowing the yield curve. Just before the war, the 10-year yield had a 58-basis point premium to the 2-year yield. It's now down to 46.

Lax auction demand is a negative sign for markets, suggesting investors demand higher yields to risk their money in U.S. assets. A narrower yield curve is sometimes associated with recession.

S&P manufacturing PMI reports were better than expected Tuesday across Europe, another contributor to yield strength, Briefing.com noted.

Earnings are light this week, though KB Home reported late yesterday in a market dogged by stubborn mortgage rates and high prices. Chewy, the pet food retailer, reports this morning before the open.

Major Wall Street indexes had another down day Tuesday, though the Nasdaq Composite suffered most. The positive move in the S&P 500 Equal Weight Index reflected strength in energy on a day when crude prices rose again. Some cyclical sectors not connected with the oil rally also rose, including materials and industrials. Defensive staples and utilities had strong upward moves.

From a technical standpoint, major indexes remain in a downtrend, and the S&P 500 saw increased selling pressure during the final minutes of trading yesterday. That's not a good setup heading into Wednesday, at least on the charts.

"I’m not sure that we’ve seen that moment of complete 'capitulation'," Schwab's Peterson said. "Typically these flush-out events are accompanied with a “V” bottom and a VIX spike, not always, but historically."

Major indexes remained below their respective 200-day simple moving averages even with Monday's bounce.

However, the S&P Equal Weight Index and Russell 2000 both bounced off their respective 200-day averages on Friday and Monday, "so perhaps the traders could use that as a small bastion of hope," Peterson added.

The small-cap Russell 2000 gained Tuesday as tech and communication services stocks cratered, perhaps a sign of investors flocking back, at least for one day, into more domestically-oriented companies.

Seven of 11 S&P 500 sectors advanced Tuesday, led by a 1.9% gain for energy. Communication services finished last, down 2.28%, with Alphabet's sharp decline keeping that sector pinned. Tech fell 0.6%. There didn't appear to be any single news story or other development weighing on tech or communication services, but risk-off sentiment as the war continued might explain investors flocking toward less aggressive sectors.

In individual trading Tuesday, chip giant Broadcom fell 1%. Broadcom is seeing supply chain constraints, including capacity limits at its manufacturing partner Taiwan Semiconductor Manufacturing due to soaring demand for AI chips, Reuters reported.

A number of closely followed tech firms suffered on Tuesday, with losses of 3% or more for IBM, Palantir, Adobe, Oracle, Alphabet, AppLovin, ServiceNow, and Salesforce.

Estee Lauder tumbled 10% after the company confirmed to media it's in take over talks with Puig, a Spanish beauty and fashion firm.

Dell swam against the strong downward current in the tech sector, rising 7.5%. It's benefitted from ideas its server business could make competitive gains after recent negative headlines about Super Micro Computer involving alleged smuggling of AI chips and servers into China.

Bitcoin fell nearly 2%, pulling down a number of crypto-related firms. The worst drop was for Circle Internet Group, which fell 20% on worries that a crypto market structure bill would ban rewards on stablecoin balances, Barron's reported.

The Dow Jones Industrial Average® ($DJI) dropped 84.41 points Tuesday (-0.18%) to 46,124.06; the S&P 500 Index (SPX) slipped 24.63 points (-0.37%) to 6,556.37, and the Nasdaq Composite® ($COMP) lost 184.86 points (-0.84%) to 21,761.89.