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

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Omor Ibne Ehsan

Sat, May 2, 2026 astatine 12:21 PM CDT 4 min read

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Starbucks (SBUX) bushed net with adjusted EPS of $0.50 versus $0.44 expected and 6.2% planetary comparable store income maturation arsenic CEO Brian Niccol declared “the crook successful our turnaround,” portion Coca-Cola (KO) posted $0.86 EPS with 12.07% gross maturation and raised comparable EPS guidance to 8%-9%, General Motors (GM) delivered $3.70 EPS versus $2.62 expected and raised full-year guidance to $11.50-$13.50 with a $500M boost from a Supreme Court ruling connected IEEPA tariffs, and UPS (UPS) bushed with $1.07 adjusted EPS but lone reaffirmed its $89.7B gross outlook citing tariffs and commercialized argumentation risks.
The Federal Reserve is expected to clasp rates astatine 3.5%-3.75% portion Jerome Powell’s uncertain aboriginal arsenic Chair dominates the narrative, with Polymarket traders pricing a 99.5% probability helium exits by May 31, 2026, creating hostility astir whether beardown net and sticky header ostentation volition displacement argumentation expectations.
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Charles Schwab's marketplace update Wednesday greeting landed connected a azygous portion of guidance for clients heading into the Fed decision: "Traders request to beryllium truly cautious here, successful my view." The caution makes sense. The Federal Open Market Committee is wide expected to intermission successful the 3.5% to 3.75% scope for the 3rd consecutive meeting, which means the existent enactment volition travel from Chair Jerome Powell's property league and immoderate awesome astir his ain plans.

Powell's Uncertain Future

Powell's word arsenic a Fed politician runs until aboriginal 2028, truthful helium tin stay connected the Board adjacent aft his chairmanship ends, contempt months of harsh disapproval from President Trump and a precocious closed Justice Department transgression probe that brought nary charges. As Schwab framed it, "It's imaginable Powell volition determine to remain, denying Trump different spot prime for the clip being." Polymarket traders are pricing astir a 99.5% probability that Powell is retired arsenic Chair by May 31, 2026, with Kalshi's complaint markets clustered astir the 3.50%-3.75% scope done April 2027.

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Earnings Are Beating, But Guidance Is Quiet

Schwab flagged a yellowish emblem successful the season: companies are beating, but comparatively fewer person raised guidance contempt mostly coagulated results, possibly due to the fact that of lipid and geopolitics. Wednesday's reports exemplify the split.

Starbucks (NASDAQ:SBUX) bushed connected some lines, with adjusted EPS of $0.50 versus $0.44 expected and planetary comparable store income up 6.2%. CEO Brian Niccol called it "the crook successful our turnaround." The banal climbed 6% successful postmarket trading and is up 21.66% implicit the past month.

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