Light Calendar To Watch With Stocks At Highs

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 Friday, December 26th. Wall Street gave investors an early Christmas present this week, with markets reaching record highs before the holiday and after a strong earnings season. A surprisingly robust third-quarter gross domestic product, or GDP, report added to the market merriment, even as it complicated the outlook for near-term interest rate cuts. Whether the positive atmosphere will continue into 2026 is still up for debate, of course, as U.S. markets remain highly valued and heavily concentrated in a handful of mega-cap tech stocks.

0:52Against that backdrop, today's schedule is notably light, with no major economic reports on the docket and only a few micro-caps and penny stocks reporting earnings.

1:05Turning to the week ahead, investors will monitor housing data from November's pending home sales report on Monday at 10 a.m. ET, and then look to October's S &P Cotality Case-Shiller Home Price Index on Tuesday at 9 a.m. ET. With mortgage rates slowly coming down, pending home sales have risen for three straight months, while home prices have appreciated on an annual basis for four straight. However, recent home price appreciation has trailed the overall inflation rate, meaning the inflation-adjusted value of homeowners' home equity has declined. The Federal Reserve's meeting minutes from December will follow the housing reports on Tuesday afternoon next week, potentially providing investors with a better idea of the outlook for interest rates among the divided members of the central bank.

1:54As far as earnings for the week ahead, investors won't have too much to monitor other than a few more small and microcap reports to round out the earnings season. In economic data on Wednesday, U.S. initial jobless claims came in at 214 ,000 for the week ending December 20th, well below estimates of the 244 ,000 initial claims figures seen the week prior. This was welcome news for the economy after a string of discouraging labor market reports. On the other hand, continuing claims for the week ended December 13th rose slightly, topping consensus estimates. Despite a slight decline in interest rates, mortgage applications for the week ending December 19th also fell 5 % from the prior week, according to the Mortgage Bankers Association, and refinancing activity slipped 6%.

2:41However, refinancing activity was still up 110 % year-over-year. Shifting the focus back to markets, gold eked out price gains on Wednesday, and the price of silver jumped over 1.2%, continuing the meteoric rise for the precious metals. Treasury yields slipped across most of the curve before the holiday, with the yield curve flattening slightly in a shift from the recent steepening trend. The futures market priced in a 15.5 % chance of a January rate cut as of Wednesday afternoon, according to the CME FedWatch tool. That was up slightly from the 13.3 % seen on Tuesday. Looking at individual market movers on Wednesday, Nike stock surged 4.6 % after regulatory filings showed Apple CEO Tim Cook personally invested$3 million in the retailer.

3:31Cook serves as the lead independent director and chair of the compensation committee for Nike's board. Nike shares have been in a downward spiral since reaching an all-time high, around$170 in 2021, falling roughly 65%. Shares of Micron Technology and SanDisk also continued their winning streak, rising 3.8 % and 2.1 % respectively, amid investor optimism about improving conditions in the digital memory and storage market. Both companies posted solid earnings in November, but have mostly been buoyed by strong demand for their products from AI data centers and infrastructure. Meanwhile, Intel shares sank as much as 3.3 % before recovering most of their losses after Reuters reported that NVIDIA recently stopped testing AI chips using Intel's 18A production process.

4:26The proprietary production process is meant to challenge Taiwan semiconductor manufacturing's dominance in the advanced semiconductor fabrication market. NVIDIA's decision, if confirmed, would represent a setback for Intel. Intel stock had surged in recent months after NVIDIA agreed to invest$5 billion in the company in September following the U.S. government's decision to take a 10 % stake. From a sector perspective, Wednesday saw a slight shift from the recent trend, with defensive sectors, including consumer staples and healthcare, rebounding after a bout of underperformance. Real estate also bounced back after Tuesday's strong third-quarter GDP report reduced rate cut expectations, leading some investors to move away from the sector.

5:10Meanwhile, a few cyclical sectors, such as energy and communication services, lagged the broader market. Overall, Wednesday's broad, yet relatively muted rally led S &P 500 breadth to increase yet again. The percent of S &P 500 stocks trading above their 50-day moving average rose to 62.2 percent. In late November, that figure was as low as 30%.

5:37The Dow Jones Industrial Average rose 288.75 points Wednesday, or 0.6%, to 48 ,731.16. The S &P 500 Index advanced 22.26 points, or 0.32%, to 6 ,932.05. And the Nasdaq Composite jumped 51.46 points or 0.22 % at 23 ,613.31. This has been the Schwab Market Update podcast. To stay informed, visit www.schwab.com slash market update 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. I'll be back with another update Monday.

6:32For important disclosures, see the show notes and schwab.com slash market update podcast.