Another Week of Inflation Data Arrives
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Welcome 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.

The week begins with investors awaiting crucial U.S. inflation data, overseas central bank meetings, and the latest set of tech earnings. This follows major U.S. indexes setting a series of new highs last week on growing hopes of a December rate cut and a monthly jobs report that didn't rock the bullish outlook.

This week's key data release is Wednesday's Consumer Price Index, or CPI, while earnings later today from Oracle and on Thursday from Broadcom keep tech front and center after last week's robust leadership from the sector.

One question entering the new week is whether tech can continue to power major indexes after taking a backseat to cyclical sectors like financials and consumer discretionary most of this fall. Recent U.S. economic data has softened slightly, putting cyclicals and small caps at a bit of a disadvantage.

Checking back on Friday's action, markets settled near all-time highs after the U.S. November nonfarm payrolls report showed jobs growth rebounding to 227,000. That was up sharply from October's revised 36,000, but in line with analysts' expectations. Unemployment climbed slightly to 4.2 percent and wages grew 0.4 percent month over month.

Hopes for a Federal Reserve rate cut at its meeting in just over a week spiked on the jobs report after it reinforced signs of cooling labor growth. Wage gains, however, were above analysts' estimates and could suggest the Fed has more work to clamp down inflation. The Fed meets after a couple of closely watched central bank decisions this week, including the Bank of Canada on Wednesday and the European Central Bank, or ECB, on Thursday.

The ECB is getting closer to a 50 basis point cut, but it may not happen this week, said Michelle Gibley, director of international research at the Schwab Center for Financial Research. The consumer price index recently ticked higher, but this could be a short-term occurrence.

Meanwhile, growth has slowed, and there is increasing concern that inflation in the eurozone could overshoot to the downside, increasing the case for a 50-basis point cut at some point in coming meetings. Back home, Oracle's earnings loom later today. The company is often seen as a general barometer of the tech market. Toll Brothers, a home-building firm that leans toward the luxury end of the market, is the other major earnings report to monitor this afternoon.

Other prominent earnings reports later this week include Sienna and Costco. Friday's jobs report kicked off a triumvirate of key data leading up to the Fed's meeting that could play into policymakers' decision on rates. The November producer price index, or PPI, this Thursday is the last rung in the inflation ladder following Wednesday's CPI.

Analysts expect the CPI to show 0.2% headline growth and 0.3% core growth, according to Trading Economics. Core CBI excludes volatile food and energy prices. Those ratings are the same as October's.

On an annual basis, analysts see CPI climbing 2.7% up from 2.6% in October. Core CPI is expected at 3.3%, the same as in October. None of these estimates hint at progress on inflation, something Fed speakers remain concerned about.

Still, most recent Fed policymakers speaking last week expressed confidence that inflation will come down to the central bank's 2% goal, even if some declined to say whether they support a December rate trim. There are no Fed speakers on tap this week as the central bank enters its pre-meeting quiet period.

Another item to note in the days ahead is the latest set of U.S. Treasury note auctions, especially a 10-year note auction scheduled for midday Wednesday.

Solid demand for treasuries seen in auctions just before Thanksgiving suggested that current yields are attracting buyers. That could be one possible reason the benchmark 10-year note yield stayed in check last week, well below its recent 4.5% peak. It closed Friday down 3 basis points on the day and ended the week at 4.15%, near 6-week lows.

Though lower Treasury yields gave stocks some support last week, eight of 11 S&P 500 sectors are down over the last five days. The only ones in the green during that time are consumer discretionary, communications services, and infotech. As a reminder, these happen to be the same sectors where the so-called mega caps reside, meaning those companies' mammoth market capitalizations are mainly responsible for last week's index gains.

As of late Friday, traders saw an 85% chance rates will fall 25 basis points at the conclusion of the Federal Open Market Committee meeting December 17-18 and a 15% chance of no move based on the CME FedWatch tool. The odds of a rate cut climbed significantly from around 70% before the jobs report.

The S&P 500 index rose 15.16 points or 0.25% Friday to 6,090.27 to end the week up 0.96%. The Dow Jones Industrial Average fell 123.19 points or 0.28% to 44,642.52 to end the week down 0.60%.

And the Nasdaq Composite added 159.05 points, or 0.81%, to 19,859.77 to end the week, up 3.34%. This has been the Schwab Market Update Podcast.

To stay informed, visit schwab.com slash market update or follow for free in your favorite podcasting app. And if you like what you've heard, please consider leaving us a rating or review. It really helps new listeners find the show. I'll be back with another update tomorrow. For important disclosures, see the show notes and schwab.com slash market update podcast.