Here is Schwab's early look at the markets for Monday, December 1.
The final month of the year kicks off with a quiet schedule Monday that belies busyness ahead. Today includes important U.S. manufacturing data, but other than that the decks are relatively clear. Things start to pick up in a big way by mid-week with several labor market readings and a handful of tech- and retail-related earnings before Friday's key inflation report and consumer sentiment.
The inflation data, due before Friday's open, is the Federal Reserve's favored Personal Consumption Expenditures, or PCE, price index for September. Timed just ahead of next week's Fed meeting, it's among the last milestone data points the Fed will get before it makes a rate decision, though the data are two months old.
Hopes for a rate cut powered the market last week and sent Treasury yields down to one-month lows briefly under 4% for the 10-year Treasury note. As of this morning, futures trading dialed in 87% chances of a December rate cut a week from Wednesday, but that's not necessarily set in stone. Inflation remains stubbornly high, and Friday's PCE report isn't expected to show much improvement, with early expectations at 0.3% for headline PCE and 0.2% for core, which excludes volatile food and energy prices.
Fed speakers the last two weeks were more dovish in tone, but many still sounded hesitant about easing policy after cutting rates in September and October. The current scorecard suggests that even if the Fed cuts rates again from the current range of 3.75% to 4%, it could be a divided vote.
Odds of a rate cut increased further following the Fed's Beige Book last Wednesday that showed more signs of a cooling labor market, as hiring was mostly for replacements, not expansion. The report also pointed toward slower consumer spending and modest wage growth.
This is a quiet week for Fed policy makers ahead of next week's meeting. However, last week featured media reports suggesting the White House is soon going to announce its pick for Fed Chairman Jerome Powell's replacement. His term expires next May 15. If the administration chooses someone considered more dovish, it could push up odds of rate cuts later in 2026.
There's no nonfarm payrolls report next week due to the shutdown. Still, investors can get a sense of the labor market through ADP's November private employment report Wednesday before the open and the Challenger job cuts report for November early Thursday.
Last week, ADP said jobs growth fell by 13,500 on average during the four weeks through early November, and the October Challenger report saw layoffs surge 183% from September amid what it called "AI adoption, softening consumer and corporate spending, and rising costs." The question is whether that was a one-month blip or something that will be extended, and how government employee layoffs might factor into the November report.
Today's data feature an update on the U.S. manufacturing economy after a mixed picture from several regional reports recently. The November ISM Manufacturing Index, due at 10 a.m. ET, is expected to show only a mild rise to around 49, according to analysts, from last month's 48.7. Anything below 50 indicates contraction.
There was manufacturing data from China over the weekend, which investors likely will eye this morning for any signs of improvement after last month's trade deal between China and the U.S.
Markets spent most of last week in an optimistic mode, but Wall Street might be vulnerable to selling if data depicts accelerating economic weakness.
Earnings this week feature a mix of mostly smaller firms, while Marvell Technology tomorrow after the close and Salesforce after Wednesday's close could provide different views of the churning AI market. Last time Marvell reported, back in late August, the company's outlook disappointed investors, sending shares down double digits. One concern was what the firm called "lumpiness" in demand from cloud providers, CNBC reported at the time. Investors will likely listen closely to Marvell's call for any signs of whether that lumpiness smoothed out or got worse.
The S&P 500 index eked out a tiny November gain by climbing moderately in a shortened post-holiday session Friday, while Treasury yields inched up. The Nasdaq 100 finished up on Friday as well, but fell about 1.6% for the month, making November the first slide for that tech-heavy index since April. Though Friday's gains were the fifth session in a row of positive price movement, it's unclear how much conviction was behind the Friday rally in a short, low-volume session.
For stocks, last week was the strongest Thanksgiving week since 2012, Briefing.com noted.
The 10-year yield remained near one-month lows just above 4.01% by the end of the week. Last week's decline from recent highs of around 4.15% supported risk-on sentiment and led to gains in rate-sensitive areas, especially small caps. The Russell 2000 index was up 8% over the last week by late in Friday's session.
Tech and AI-linked sectors led gains last week, and semiconductors were standout performers, up 8% in a week and back above the 50-day moving average. There's been a lot of upside call buying in the chip stocks, particularly Nvidia and Marvell.
From a breadth perspective, seven of 11 S&P 500 sectors had 50% or more of their shares trading at or above their 50-day moving averages by midday Friday, with leaders including health care, utilities, energy, materials, financials. Cyclical and rate-sensitive sectors are mixed in terms of breadth. Market breadth can help investors gauge strength or weakness.
Sector action Friday continued the week's earlier pattern of broad-based gains. Ten of 11 S&P sectors rose on the day, while every sector gained over the prior week, led by communication services and consumer discretionary. Friday saw energy grab the brass ring quite easily thanks to a more than 1% jump in crude prices after their descent earlier that week. Traders bid up oil ahead of Sunday's OPEC meeting.
In corporate news, Amazon holds a conference in Las Vegas this week that could help investors get a better understanding of cloud and AI infrastructure direction, Briefing.com said.
Checking Friday's active individual stocks, crypto-related firm Circle Internet Group climbed more than 9% after S&P Global downgraded Circle's rival stablecoin issue Tether to "weak."
Walmart climbed more than 1% as investors anticipated solid Black Friday and Cyber Monday holiday shopping. Other consumer stocks also performed well Friday, particularly Amazon, Chewy, and MGM Resorts.
Semiconductors and related stocks had a solid day to end the month with strength in Super Micro Computer, AppLovin, ASML, Constellation Energy, and Advanced Micro Devices.
Nvidia continued to struggle, however, falling 1.8% and finishing down roughly 12% for November as investors appeared to turn toward competitive stocks in the space. Those included Alphabet, shares of which barely budged Friday but ended up about 14% for the month.
Intel didn't have an impressive November but did go out on a positive note, rising more than 10% Friday following a post from an influential market analyst saying Intel could begin shipping Apple's lowest-end M processor as early as 2027.
The Dow Jones Industrial Average® ($DJI) rose 289.30 points Friday (0.61%) to 47,716.42; the S&P 500 index (SPX) added 36.48 points (+0.54%) to 6,849.09, and the Nasdaq Composite® ($COMP) gained 150.99 points (+0.65%) to 23,365.69.
For the week, the DJIA rose 3.18%, the SPX climbed 3.73% and the Nasdaq Composite rose 4.91%.