‘Traders Need to Be Really Careful Here’: Schwab on the Fed Decision and Powell’s Uncertain Future

Charles Schwab’s market replace Wednesday morning landed on a single piece of steering for purchasers heading into the Fed determination: “Traders need to be really careful here, in my view.” The warning is sensible. The Federal Open Market Committee is extensively anticipated to pause in the 3.5% to 3.75% vary for the third consecutive assembly, which implies the actual motion will come from Chair Jerome Powell’s press convention and any sign about its personal plans.

Powell’s Uncertain Future

Powell’s time period as a Fed governor runs till early 2028, so he can stay on the Board even after his chairmanship ends, regardless of months of harsh criticism from President Trump and a not too long ago closed Justice Department felony investigation that introduced no expenses. As Schwab framed it, “It’s possible Powell will decide to remain, denying Trump another seat pick for the time being.” Polymarket merchants are pricing roughly a 99.5% chance that Powell is out as Chair by May 31, 2026, with Kalshi’s price markets clustered round the 3.50%-3.75% vary by April 2027.

Earnings Are Beating, But Guidance Is Quiet

Schwab flagged a yellow flag in the season: firms are beating, however comparatively few have raised steering regardless of principally stable outcomes, maybe due to oil and geopolitics. Wednesday’s studies illustrate the cut up.

starbucks (NASDAQ:SBUX | SBUX Price Prediction) beat on each strains, with EPS adjusted of $0.50 versus $0.44 anticipated and international comparable retailer gross sales up 6.2%. CEO Brian Niccol referred to as it “the turn in our turnaround.” The inventory climbed 6% in postmarket buying and selling and is up 21.66% over the final month.

Coca-cola (NYSE:KO) posted EPS of $0.86 with 12.07% income development and lifted comparable EPS growth guidance to 8%-9%. UPS (NYSE:UPS) beat with adjusted EPS of $1.07 however solely reaffirmed its $89.7 billion income outlook, and CEO Carol Tomé flagged tariffs and commerce coverage as ongoing dangers. General Motors (NYSE:GM) blew previous estimates at $3.70 versus $2.62 and raised full-year EPS steering adjusted to $11.50-$13.50, helped by a roughly $500 million favorable adjustment tied to a US Supreme Court ruling on IEEPA tariffs.

The Macro Setup

April shopper confidence printed at 92.8 versus 89.2 anticipated, the highest studying since late final yr. Q1 GDP got here in at 2.0%, a rebound from This fall 2025’s 0.5%. March PCE confirmed headline inflation accelerating to 3.5% year-over-year on a 11.56% month-to-month surge in vitality, whereas core PCE held at 3.2% with month-over-month moderation to 0.29%.

That combine, sticky headline inflation, cooling core, and a politically charged Chair, is strictly why Schwab is telling purchasers to preserve place sizes trustworthy. Listen to Powell’s tone, and watch whether or not he ideas his hand on staying previous May 15.