Here is Schwab's early look at the markets for Friday, November 28.
First, an important note: Due to the 1:00 p.m. ET market close, today’s Schwab Market Update is an abbreviated version. For late-breaking market news, please tune in to the Schwab Network, which will be broadcasting today from 8 a.m. until 1 p.m. ET.)
The last day of November trading dawns with a barren calendar and an early close, as markets shut at 1 p.m. ET after yesterday's holiday closure. Volume is likely to be thin, potentially exacerbating moves, and no major earnings or data are on the calendar.
With volume light, any major slides or rallies in major indexes might not reflect widespread investor conviction one way or the other. Volume next week could rise, giving a better sense of investors' leanings.
Major indexes rallied a fourth straight session Wednesday while the benchmark 10-year Treasury yield was unchanged at one-month lows of 4%. The S&P 500 index finished Wednesday at 6,812, striking distance from erasing its monthly losses. It would need to close above 6,840 today to finish November higher after being down nearly 5% from October 31 as recently as November 20.
Looking ahead to the final month of a turbulent year, sector action could remain volatile after November saw a rotation out of some tech names and into classic defensive areas like health care and staples.
"Historically, the underperforming sectors tend to lag as we move to year-end, due to tax loss selling, and the outperforming sectors tend to be bought into year end, in part due to some window dressing," said Nathan Peterson, director of derivatives research and strategy, Schwab Center for Financial Research. "So it’s unclear whether we continue to see rotation away from tech or not."
Window-dressing is a term referring to fund managers buying shares of high-performing stocks late in a quarter so they show up in the quarterly reports sent to clients.
The next key inflation reading comes a week from today when the delayed September Personal Consumption Expenditures, or PCE, data are due. This is the inflation data most closely watched by the Federal Reserve.
Though U.S. markets were shut yesterday and trading is shortened today, the rest of the world didn't take a day off. A host of data from Japan came out yesterday that could help determine the path of interest rates there. And over the weekend, China releases its official NBS Manufacturing and non-Manufacturing PMI numbers for November. The previous readings were 49.0 and 50.1, respectively, right near the 50 line that denotes expansion.
Analysts don't expect huge changes from those in the weekend numbers from this key economy. Still, any hiccups could be meaningful for U.S. firms with major markets in China like Nike and Tesla.
In data Wednesday, initial weekly jobless claims totaled 216,000, at the low end of the near-term range and below expectations of 225,000. While it's a single week, it's not the kind of number that would raise recession concerns, though continuing claims remain near four-year highs.
Weekly mortgage applications barely budged, while September durable goods orders rose 0.5%, outpacing consensus of 0.3%. And orders for non-defense capital goods excluding aircraft, rose a solid 0.9%. That category is often seen as a proxy for business demand. However, the Atlanta Fed's GDPNow indicator now pegs third quarter U.S. gross domestic product growth at 3.9%, under the previous 4%, and the Chicago PMI, a manufacturing index for that region, looked quite soft at 36.3, well under the Briefing.com consensus of 44.5.
Chances of a rate cut in December climbed to 85% by late Wednesday following mostly soft data earlier this week, according to the CME FedWatch Tool. Futures trading bake in high odds of a rate pause in January.
A 7-year Treasury auction Wednesday didn't generate much interest, following a lackluster 5-year auction the prior day, suggesting there's not a huge amount of pent-up demand at current yields.
Checking Wednesday's sector action, eight of 11 rose. Tuesday's leader--communication services--flipped places to finish last while info tech, a Tuesday laggard, led the way. Health care still leads sectors this month with one day left to trade.
"Health care has garnered some attention because of an improving earnings profile looking ahead," said Liz Ann Sonders, chief investment strategist, Schwab Center for Financial Research, adding that investor rotation has also helped the sector.
Wednesday featured strength again in retail stocks after several solid earnings reports this week, while semiconductors charged back 2.75% despite market leader Nvidia trailing many peers amid a return to risk-on action in tech. Airlines also did well as the Federal Aviation Administration anticipated the busiest Thanksgiving flight schedule in 15 years, the Associated Press reported.
Checking individual stocks Wednesday, Oracle, hurt by worries about heavy AI spending, climbed 4% after a positive note from Deutsche Bank suggesting the recent pullback provides an attractive entry point..
Slumping Nvidia rose 1.5% Wednesday, possibly reflecting a bullish note from Wedbush, which argued that despite momentum from Alphabet and Broadcom, the AI market "starts and ends with Nvidia today" and that's not changing for a few years.
Urban Outfitters popped 13.5% after earnings and revenue impressed investors.
Dell gained nearly 6% after earnings beat expectations, though revenue came up just short. Guidance for solid fourth-quarter revenue well above consensus appeared to give shares a lift.
Deere fell nearly 6% as investors reacted to a disappointing outlook from the agricultural equipment firm.
Key earnings next week include Marvell Technology, CrowdStrike, Salesforce, and Kroger.
The Dow Jones Industrial Average® ($DJI) added 314.67 points Wednesday (+0.67%) to 47,427.12; the S&P 500 index (SPX) rose 46.73 points (+0.69%) to 6,812.61, and the Nasdaq Composite® ($COMP) gained 189.1 points (+0.82%) to 23,214.69.