Here is Schwab's early look at the markets for Wednesday, December 31.

The final trading day of the year begins with the S&P 500 index tracking for gains of about 17% in 2025 and the tech-packed Nasdaq 100 up more than 21%. Leading sectors include communication services, info tech, and industrials. Wall Street's slow grind lower continued yesterday, with major indexes losing ground for the third day in a row but finishing not far from all-time highs posted last Thursday.

Today may be New Year's Eve, but it's a full trading session before tomorrow's holiday closure. Friday also trades with normal hours, but volume could be light both days, as it's been most of this week. With volume trending about 25% below normal, any ups or downs in the market may not reflect broad conviction and could be discounted once full participation returns Monday.

There's little on the calendar today, but weekly initial jobless claims will likely get a look at 8:30 a.m. ET. Analysts expect 226,000, according to Briefing.com, which would be up from 214,000 the prior week.

Federal Reserve minutes released late Tuesday from the December meeting showed officials focused on stubborn inflation brought about partly by tariffs, along with rising unemployment. Central bank policy makers said inflation remains tilted to the upside and may persist longer than they'd previously expected. Hiring remains subdued, officials said at the meeting, and risks to the labor market are tilted to the downside.

Still, they expect the pace of economic growth to accelerate in 2026 thanks to support from fiscal policy, easing regulations, and "somewhat favorable" financial market conditions. The decision to lower rates wasn't unanimous, and even some who voted in favor of a rate cut indicated that their decision was "finely balanced" and they could have supported leaving rates unchanged.

Those voting against a cut cited lack of progress fighting inflation, and some said recent labor market data didn't suggest significantly weakening conditions. Looking ahead, participants said they could support future rate cuts if inflation falls as expected, while some thought rates should not be lowered again for a while to assess the lagged effect of lower rates on the economy.

In data Tuesday, October's FHFA Housing Price Index and October S&P Cotality Case-Shiller Home Price Index both showed more gains, with FHFA rising 0.4%, above the Briefing.com consensus of 0.1% month over month. The 20-city composite Cotality Index rose 1.3%, above the 1.1% year-over-year consensus.

However, annual home price growth was down from 1.4% in September and near two-year lows. If this trend continues, it might suggest light demand seen in recent months could finally be translating into slower price growth, though home prices remain at all-time highs, partially due to slim supplies and because the home market has also become a target for investors.

Tensions continued Tuesday in the Middle East, keeping crude oil prices elevated and boosting shares of energy companies early this week. Another source of energy strength came as Bloomberg reported that OPEC isn't expected to raise production plans at its meeting this coming weekend.

Squabbling between large Western powers and Iran this week included Iran saying a state of war exists and President Trump issuing stern warnings to Iran over its nuclear program, including threats to strike it again as the U.S. did earlier this year.

Along with that, Reuters reported that China had fired missiles into waters near Taiwan. This follows the Trump administration's approval of a large package of U.S. arms to Taiwan.

Speaking of China, its NBS Manufacturing data is among the small number of economic items investors will be checking today following months of contraction in China's factory sector.

The S&P 500 index slipped Tuesday but losses remain light. With economic catalysts sparse between now and next week's jobs data, it might be difficult for major indexes to break out of their current ranges, barring some sort of geopolitical drama.  Next week brings several readings on employment, including November job openings, but the main event is likely to be December nonfarm payrolls due January 9.

Earnings season begins the week of January 12 when large U.S. banks start reporting, along with some airlines. Analysts expect solid fourth quarter S&P 500 earnings growth of around 8.3%, according to FactSet, down from 13.6% in the third quarter.

Though it's tempting to think stocks might stage a rally once the calendar turns and data and earnings resurface, investors should keep in mind that January often features profit taking as participants wait until the new year to sell winners, putting off capital gains taxes until the following year. Some seasonal profit taking appears to have moved into December this year, however, keeping the so-called "Santa Claus" rally at bay at least in recent sessions.

Under the surface, industry-wide net equity fund flows are on track for the best month of the year, so there are buyers in this market. It’s likely they're repositioning some of their holdings into other sectors beyond tech. There appears to be a recent bias toward cyclical sectors, as financials, materials, communications, discretionary and industrials are showing the best breadth.

Positioning still looks healthy with nearly 63% of S&P 500 stocks above 50-day moving average and 61% above the 200-day moving average as of Tuesday afternoon. Monday's sell-off featured three stocks declining for every two advancing, but volume was light, so take that with a grain of salt. Advancers slightly outpaced decliners Tuesday at the New York Stock Exchange through midday.

Six of 11 S&P 500 sectors rose Tuesday despite the index's tepid performance, led by energy and communication services. Pressure on info tech and consumer discretionary continued, with discretionary's drop partly reflecting a 1% decline in shares of Telsa, which have been volatile lately. That said, Tesla is up 21% year to date, outpacing the S&P 500's roughly 17% gain.

Silver and gold rebounded sharply yesterday from Monday's dramatic losses. Silver and copper—which is also up sharply this year—are important industrial metals, so their strength and volatility could make life more difficult for major companies depending on these materials. Gold didn't move much Tuesday.

Mining stocks, including Newmont and Hecla, climbed Tuesday along with silver after both lost ground Monday.

Pressure continued on some stocks related to AI, including Super Micro Computer, CoreWeave, and Palantir, which all fell more than 1% Tuesday. Many participants have been rotating out of the tech sector amid concerns about high valuations. Nvidia has fallen two straight days but is up 39% this year.

Warner Bros. Discovery shares didn't react much to CNBC's report late Tuesday that the company would reject Paramount Skydance's bid next week. Neither did shares of Netflix, which has a competing bid on the company.

Treasury yields finished barely changed Tuesday after Fed minutes held virtually no surprises. The 10-year Treasury yield rose 1 basis point to 4.13%, near the middle of its recent range.

The futures market priced in 15% odds of a January rate cut as of late Tuesday, according to the CME FedWatch Tool. That was relatively similar to odds earlier Tuesday before the minutes got released.

The Dow Jones Industrial Average® ($DJI) dropped 94.87 points Tuesday (-0.20%) to 48,367.06; the S&P 500 index (SPX) fell 9.50 points (-0.14%) to 6,896.24, and the Nasdaq Composite® ($COMP) lost 55.27 points (-0.24%) to 23,419.08. Small-cap stocks in the Russell 2000 index had the worst day of any major index, falling 0.76%.