Here is Schwab's early look at the markets for Wednesday, November 26.

First, an important note: U.S. markets are closed Thursday, November 27, in observance of the Thanksgiving holiday. Due to the early market close, Friday’s Schwab Market Update will be an abbreviated version, published at the normal time ahead of the market open.

Before breaking for the holiday tomorrow, investors face earnings from Deere this morning along with a final helping of data before the stuffing and pumpkin pie. If Thanksgiving were today, bulls would have lots to celebrate after Wall Street spent the last three sessions digging itself almost out of a deep November hole thanks to rising rate cut hopes and mostly solid retail earnings.

Deere is among the last major industrial firms to report, and shares are up over the last month. Last time, the agriculture machinery maker estimated a pre-tax impact of $600 million from tariffs in fiscal 2025, though recent progress on sales of U.S. soybeans to China may have brightened the farm picture in a tough year for the industry. Deere lowered the top end of its net income guidance last time it reported, which sent shares down. Guidance will likely be the focus again today.

Today's initial jobless claims data at 8:30 a.m. ET is expected to show a 225,000 reading, up from 220,000 the prior week, according to Briefing.com. The prior week's continuing claims, a measure of how difficult it is to find a job when out of work, rose to four-year highs of 1.97 million.

The MBA Mortgage Association weekly applications index is also due early today after falling 5.2% in the week that ended November 14.

Yesterday's rally came despite mostly disappointing data. Payroll processing firm ADP said job losses averaged 13,500 per week for the four weeks ending November 8, weighing on Wall Street, while September retail sales disappointed and the September Producer Price Index, or PPI, was mostly in line with expectations but still stubbornly above the Federal Reserve's 2% goal.

PPI rose 0.3%, with core PPI, excluding energy and food prices, up 0.1%. Consensus had been for a 0.3% headline increase and a 0.2% uptick in core. Retail sales rose 0.2%, well under 0.4% consensus.

The ADP report raises broader questions with October government jobs data not available due to the shutdown and November data not due until after the Fed's meeting next month.

"The ADP report is raising concerns that the labor market is weaker than expected," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "PPI was mostly in line with expectations. It doesn't suggest that inflation is turning a corner and will move lower any time soon."

The next key inflation reading comes a week from Friday when delayed September Personal Consumption Expenditures, or PCE, data are due.

Retail sales data look concerning, especially a 0.1% drop in the closely watched category of control group retail sales, used to calculate gross domestic product, or GDP. Analysts had expected a 0.3% rise.

"This raises concerns that the consumer is weakening going into holiday season and may pull back," Howard said, adding that this is September data so it's unclear how much weight the Federal Reserve wants to put into it.

November Consumer Confidence from the Conference Board, also released yesterday, was a dismal 88.7, well below the Briefing.com consensus of 93.3 and down from 95.5 in October. A year ago, it was 112.8. On a positive note, long-term inflation expectations remained at 5.7%. Less positive was the expectations index trending down again, suggesting pessimism.

"Overall readings are near the pandemic lows," said Kathy Jones, chief fixed income strategist, SCFR.

Chances of a rate cut in December climbed to 83% by late Tuesday after all the soft data, according to the CME FedWatch Tool. That doesn't mean a rate cut is guaranteed, however, considering September's PPI numbers.

"PPI came in higher than expected at 2.7% year over year, and core at 2.9%," Jones said. "A Fed rate cut in December is still a toss-up."

The PPI report combined with ADP and retail sales data puts the Fed in an awkward position amid signs the economy continues to slow while prices aren't retreating. The Fed's dual mandate of maximum employment and stable prices means it must consider both labor and inflation when it makes a rate move, and both look concerning.

Voices from Fed policy makers late last week and early this week generally appeared to tilt toward another cut, one reason the odds climbed so much over the last week. Whatever decision it makes is likely to draw dissenters. Some of the optimism around Fed policy appeared related to a Bloomberg report that the administration is considering White House National Economic Council Director Kevin Hassett as a frontrunner to be Fed chairman. Hassett appears to want to push rates lower.

Trading volume could lighten today as the holiday approaches, possibly leading to sharper daily moves. Anyone trading may want to consider extra care, with the water already rough after last week's turbulence.

Major indexes climbed for a third straight session Tuesday, led by small caps on encouragement over a possible rate cut. The Russell 2000 small-cap index climbed more than 2% and settled above its 50-day moving average. The S&P 500 index also closed above its 50-day moving average for the first time since November 14 in a possible sign of technical resilience. The Nasdaq 100 index followed suit despite a 2.6% drop for Nvidia, its largest component.

Sector-wise, tech continues to struggle amid competition in the AI space that's weighing on chip market leaders Nvidia and Advanced Micro Devices. Both fell sharply Tuesday, and their heavy market capitalization's—particularly Nvidia's—made it hard for the Nasdaq Composite to gain much traction despite gains from Broadcom and Alphabet on news Meta may be checking out Alphabet's chips that were designed with Broadcom's assistance. Investors saw that as bad news for Nvidia and AMD.

"I think it safe to say that investing in the AI space appears to have entered into a phase where investors are more sensitive to company-specific fundamentals and are attempting to sniff out potential winners from losers, as evidenced by Oracle vs. Alphabet performance over the past 60 days," said Nathan Peterson, director of derivatives research and strategy, SCFR. Oracle reports December 8 and that could be a useful driver of near-term AI sentiment. One question is whether Oracle can calm investor fears around overspending and heavy debt issuance.

While tech struggled, other sectors picked up the slack--notably consumer discretionary. It finished in second place behind the surging health care sector and just ahead of communication services, a sector dominated by Alphabet and Meta. Tech barely climbed, keeping the Nasdaq Composite under water until midday Tuesday.

Health care is easily the leading S&P sector over the last month, up 8.4%, with communication services the only other sector in the green over that time. The S&P 500 remains on track for November losses despite this rebound, while strength in health care reflects what may be rotation out of tech as some investors take profit before year-end.

Yesterday's rally stayed broad, with eight of 11 S&P sectors higher and advancing shares exceeding declining ones at a four-to-one clip. More than 50% of S&P 500 stocks are above their 50-day moving averages for the first time since November 12, up from 31% late last week. For bullish investors, this is good news, as is the market's ability to rally Tuesday without any help from Nvidia, the largest stock.

In corporate news, Dell shares initially climbed late Tuesday as earnings beat expectations, though revenue appeared just short. Guidance for solid fourth-quarter revenue well above consensus appeared to give shares a lift.

Checking individual stocks Tuesday, retailers like Kohl's, Macy's, Gap, Best Buy, and Home Depot performed well Tuesday as earnings from Kohl's and Best Buy beat analysts' estimates. Abercrombie & Fitch rose more than 30% and Kohl's more than 40%.

Alphabet added 1.5% to new record highs Tuesday on a media report that Meta Platforms is considering its chips. Excitement about Alphabet's Gemini 3 AI launch last week continues to drive shares, as well.

Broadcom, which rose 11% Monday in association with Alphabet's rally, added another 1.9% Tuesday on the report of Meta's interest in Alphabet's chips, which Broadcom helps design.

The Dow Jones Industrial Average® ($DJI) added 664.18 points Tuesday (+1.43%) to 47,112.45; the S&P 500 index (SPX) rose 60.76 points (+0.91%) to 6,765.88, and the Nasdaq Composite® ($COMP) climbed 153.59 points (+0.67%) to 23,025.59.