Investors Eye GDP, Consumer Sentiment in Slow Week

0:05Welcome to the Schwab Market Update Podcast, where we prepare you for each trading day with a recap of recent news and a look at what's ahead.

0:17I'm Keith Lansford, and here is Schwab's early look at the markets for Tuesday, December 23rd. With earnings season and hibernation and many investors away for the holidays, those that are still tuned into markets today will be focused on the initial third-quarter gross domestic product, or GDP, estimate due at 8.30 a.m. Eastern Time. The report will offer a backward-looking read on the health of the U.S. economy, given its release was delayed nearly two months due to the government shutdown. But investors will still be looking for signs of economic indigestion that could offer the Federal Reserve more ammunition to continue lowering interest rates in 2026.

0:58Consensus expects a 3 percent seasonally adjusted annual rise in GDP, according to briefing.com, which would be a dip from the 3.8 percent seen in the second quarter. Following the GDP report, investors will turn their attention to the conference board's December consumer confidence reading, expected at 10 a.m. ET. November saw a sharp drop in consumer confidence, but consensus forecasts a rebound this month, mirroring the market's recent bullish momentum. After a range-bound November and early December that led some to question investors' AI enthusiasm, there have been early signs that a classic Santa Claus rally may actually make its way down the chimney this year.

1:41All three major market indexes were firmly in the green on Monday, with the S &P 500 closing near a record high. Whether the recent return to risk-on, mainly AI-focused investing in the U.S. markets will continue is another question. Markets appear to be shifting from AI optimism to AI skepticism, depending on the day, said Michelle Gibley, Director of International Equity Research and Strategy at the Schwab Center for Financial Research, or SCIFR. Gibley believes investors may decide to broaden their search for growth to areas beyond tech and the magnificent seven in 2026. It's a move that could benefit international equities, which have less tech exposure, strong earnings estimates, and relatively attractive valuations, she noted.

2:31Over the holidays, however, with markets shuttered at 1 p.m. Eastern time tomorrow and all day on Thursday, investors could be in for a slow week. It's likely that the market will be relatively quiet, said Cooper Howard, director of fixed income strategy at Skiffer. To this point, only a few small caps and penny stocks will report earnings today, and the earnings and economic calendar for the rest of the week is thin.

3:00There will be some weekly economic data for investors to monitor. Mortgage applications and initial jobless claims are both due tomorrow morning. With mortgage rates holding relatively steady over the past two months, surprises in the mortgage applications data could be unlikely. However, initial jobless claims will be closely monitored by investors. After the last jobs report showed the U.S. economy added just 64 ,000 jobs in November, while the unemployment rate rose to 4.6 percent, investors will be looking for more signs of weakness in the labor market. Still, it's worth noting that although it's been widely reported that the unemployment rate rose from 4.4 percent in September to 4.6 percent in November, those are rounded numbers.

3:46The actual change was just 12 basis points, a move from 4.44 % to 4.56%. The recent rise in unemployment, though relatively minor, still has some dovish Fed officials worried. Fed Governor Stephen Myron, for example, told Bloomberg Monday that he believes if the central bank doesn't cut rates aggressively, it risks a recession. With Myron's view falling out of consensus at the Fed, the bond market didn't appear overly moved by his warnings. The futures market priced in just 19.9 % chances of a rate cut in January as of Monday afternoon, according to the CME FedWatch tool. That's down from nearly 25 % a week ago.

4:31Treasury yields also rose across most of the curve, and the yield curve steepened slightly. Long-term rates are likely to continue to remain elevated in 2026 and may see some moderate upside from here, Howard said, adding that it's unlikely that the Fed will cut as much as they did this year. Turning to Monday's market action, crude oil rose more than 2.5 percent due to supply concerns after the U.S. Coast Guard began pursuing an oil tanker off the coast of Venezuela on Sunday. U.S. officials said the tanker is involved in Venezuela's illegal sanctions evasions. This comes after President Trump announced last week that the U.S.

5:15would blockade Venezuelan oil tankers under sanctions to prevent them from entering or leaving the country. Meanwhile, gold and silver prices rose to new all-time highs, signaling some investors may still be seeking out traditional safe haven assets. Precious metal prices have been buoyed of late by rising geopolitical tensions, the prospect of looser monetary policy and a weakening U.S. dollar, among other factors. Looking at individual market movers and newsmakers on Monday, Warner Brothers' discovery stock rose 3.53 percent as the battle to take over the media and entertainment company took another twist.

5:56Warner Brothers agreed to sell its studio and streaming assets to Netflix in an$83 billion deal earlier this month, but since then Paramount Skydance launched a hostile takeover bid for the company. Warner Brothers executives have so far urged shareholders to reject the Paramount offer, which values Warner Brothers at$108 billion. dollars. Chairman Samuel DiPiazza told CNBC last week that he had concerns about the backing and some key terms of Paramount's proposal. On Monday, though, Paramount altered its bid and revealed it would be backed by a$40.4 billion personal equity financing guarantee from billionaire Oracle founder Larry Ellison, the father of Paramount CEO David Ellison.

6:44Paramount Skydance shares surged 4.29 percent after the news, while Netflix stock went in the opposite direction, sinking 1.23 percent. NVIDIA shares also rose 1.49 percent after Reuters reported the semiconductor giant may start shipping its H200 AI chips to China in early February. The shipments would be the first to China since President Trump announced last month he would allow the chip sales with a 25 percent fee. With gold prices hitting all-time highs, some investors rushed into gold mining stocks, leading a group including Newmont Corporation, Barrack Gold, and Agneco Eagle Mines to rise sharply on the day.

7:30Stanley Black & Decker shares jumped 3.48 percent after the company announced an agreement to sell its consolidated aerospace manufacturing business to Howmet Aerospace for$1.8 billion in cash. CEO Chris Stanley said in a statement that the company will use the proceeds of the sale to significantly reduce its debt load. Meanwhile, shares of Dominion Energy sank 3.7 percent after the Trump administration halted the company's largest wind power project off the coast of Virginia and paused leases for four other offshore wind power projects, citing national security concerns. The Pentagon said the project's highly reflective wind towers and turbine blades create radar interference risk.

8:18From a sector perspective, cyclicals led the charge on Monday with materials, financials and energy all rising more than 1%. On the other end of the spectrum, traditionally defensive sectors, including consumer staples and utilities, lagged the broader market as investors largely shifted to a risk-on approach. Overall, 10 out of 11 S &P 500 sectors were in the green to start the week. The recent rise of cyclical sectors has helped increase the number of stocks participating in the market's uptrend. Roughly 60 percent of S &P 500 stocks traded above their 200-day moving average on Monday, while over 61 percent traded above their 50-day moving average.

9:03The Dow Jones Industrial Average added 227.79 points Monday, or 0.47%, to 48 ,362.68. The S &P 500 Index climbed 43.99 points, or 0.64%, to 6 ,878.49, and the Nasdaq Composite rose 121.21 points, or 0.52%, to 23 ,428.83. This has been the Schwab Market Update podcast. To stay informed, visit www.schwab.com slash marketupdate or follow us for free in your favorite podcasting app. And if you like what you've heard, please consider leaving us a rating or a review. It really helps new listeners find the show. Join us for another update tomorrow.

10:04For important disclosures, see the show notes and schwab.com slash market update podcast.