Stocks Face Short Day with SPX Near Even for Month

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. I'm Keith Lansford, and here is Schwab's early look at the markets for Friday, November 28th. First, an important note. Due to the 1 p.m. Eastern Time 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. Eastern Time. The last day of November trading dawns with a barren calendar and an early close as markets shut at 1 p.m.

0:50Eastern time 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.

1:30It would need to close above 6 ,840 today to finish November higher after being down nearly 5 % from October 31st, as recently as November 20th. 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 healthcare 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 at the Schwab Center for Financial Research.

2:14So 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 the day off. A host of data from Japan came out yesterday that could help determine the path of interest rates there.

2:53And 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 hiccup could be meaningful for U.S. firms with major markets in China like Nike and Tesla. In data on 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.

3:41Weekly 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 GDP Now indicator now pegs third-quarter U.S. gross domestic product growth at 3.9 percent under the previous 4 percent. 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 percent by late Wednesday following mostly soft data earlier this week, according to the CME FedWatch tool.

4:31Futures trading bake in high odds of a rate pause in January. A seven-year Treasury auction Wednesday didn't generate much interest following a lackluster five-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 rows. Tuesday's leader, Communication Services, flipped places to finish last, while Infotech, a Tuesday laggard led the way. Healthcare still leads sectors this month with one day left to trade. Healthcare has garnered some attention because of an improving earnings profile looking ahead, said Lizanne Saunders, chief investment strategist for the Schwab Center for Financial Research, adding that investor rotation has also helped the sector.

5:18Wednesday featured strength again in retail stocks after several solid earnings reports this week, while semiconductors charged back 2.75 percent, 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.

6:16Urban 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. And 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 added 314.67 points Wednesday, or 0.67%, to 47 ,427.12. The S &P 500 index rose 46.73 points, or 0.69%, to 6 ,812.61.

7:11And the Nasdaq Composite gained 189.1 points, or 0.82%, to 23 ,214.69. 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.

7:50For important disclosures, see the show notes and schwab.com slash market update podcast.