Stocks Face Uneventful Friday After Bland Return
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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. I'm Keith Lansford, and here is Schwab's early look at the markets for Friday, December 27th. It's been more than a month since the S&P 500 index had what's called an inside day on the charts, meaning highs and lows within the previous day's range and a sign of light volatility.

It almost accomplished that again Thursday in a bland trading session where no single sector rose or fell more than 0.5%. With little data and no earnings today before another holiday-shortened week, bland might be Friday's word as well.

Aside from a brief climb Thursday after soft continuing jobless claims and a strong Treasury auction demand pushed the 10-year note yield below 4.6%, the S&P 500 index stayed in the range it traded Tuesday before the holiday. The S&P 500 stayed in the range it traded Tuesday before the holiday. Yields could continue leading the stock market today, though no auctions are scheduled.

Today's data calendar remains light other than retail and wholesale inventories that don't typically have a major impact on the market. Monday brings November pending home sales, another report unlikely to cause waves. The report to watch next week isn't until Thursday when the ISM Manufacturing Index for December comes out. This is the quietest part of the year for earnings, with none scheduled today and none of note before the week of January 6th.

Big bank results begin the following week after a volatile quarter for the U.S. bank stocks. After leading the charge earlier this week, mega caps were relatively absent from Wall Street's leaderboard Thursday, despite strength from Broadcom. As stocks seen a dizzying climb since releasing upbeat earnings and guidance earlier this month, eclipsing $1 trillion in market capitalization and triggering some calls for it to be added to the so-called Magnificent Seven.

The PHLX Semiconductor Index, or SOX, says had a positive week but remains well below last summer's peak, and tech is the only S&P 500 sector currently at all-time highs. From a weighting standpoint, the Magnificent Seven, led by Apple, Nvidia, Meta, and Tesla this year, has had an outsized market impact.

That said, Microsoft isn't even in the top 200 performing S&P 500 stocks this year, so it's not always accurate to conflate the biggest stocks with the best performers. That's been true since the election, but not always the case. Apple, however, hit a new all-time high Thursday and is approaching $4 trillion in market capitalization after 11% gains month-to-date.

It received a price target increase from Wedbush this week that added to positive momentum. On Thursday, Toyota Motor was among the best S&P 500 performers with 8% gains after Nikkei Asia reported that the automaker plans to increase its return equity target to 20%.

Several retailers, including Best Buy, Target, Macy's, and Foot Locker also populated the leaderboard Thursday after MasterCard reported a 3.8% jump for U.S. holiday retail sales year-over-year. Online sales powered 6.7% higher.

Fed speakers are few and far between around the holidays, but the CME FedWatch tool now places odds of a January rate pause close to 90% and dials in just two rate cuts in 2025, down from four not long ago. Chances of at least one cut in the first quarter remained above 50% Thursday, according to the tool. The market price is in no chance of a rate hike next year.

Weekly initial jobless claims of 219,000 greeted investors Thursday, below the briefing.com consensus of 232,000 and the prior week's 220,000. Continuing claims reached 1.91 million, a new three-year high. That implies it's more difficult for people to get new jobs once they lose their positions and appeared to exert some pressure on Treasury yields Thursday.

However, the economy still appears strong based on the latest Atlanta Fed GDP Now estimate for 3.1% fourth quarter gross domestic product growth. Yesterday featured a seven-year Treasury note auction that, like continuing claims, weighed on yields and may have eased pressure on stocks. The $44 billion auction met strong demand, Briefing.com noted.

All three large U.S. Treasury auctions seem to go well this week. The solid results could imply that yields have reached levels where investors are comfortable buying fixed income, which ultimately can keep a lid on yields. Though there are no important earnings reports next week, Tesla is expected to release quarterly vehicle data. Those numbers often move the stock, which is up more than 80 percent this year.

The S&P 500 fell 2.45 points or 0.04% Thursday to 6,037.59. The Dow Jones Industrial Average added 28.77 points or 0.07% to 43,325.80. And the Nasdaq Composite dropped 10.77 points or 0.05% to 20,020.36. 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. For important disclosures, see the show notes and schwab.com slash market update podcast.