Before Holiday Feasts, Stocks Build on 3-Day Rally

Published as of: November 26, 2025, 9:09 a.m. ET

(Editor's 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).

(Wednesday market open) Stocks inched higher as the holiday break beckoned, building on a three-day win streak driven by rate cut hopes and solid retail earnings. AI-related stocks mostly climbed ahead of the open despite market leader Nvidia (NVDA) trading near two-month lows, and volatility has eased appreciably this week.

In data today, initial weekly jobless claims totaled 216,000, at the low end of the near-term range and below expectations of 225,000. Weekly mortgage applications barely budged. September durable goods orders rose 0.5%, outpacing consensus of 0.3%. Most of this week's numbers haven't impressed, though yesterday's rally lifted eight of 11 S&P sectors, including interest-rate-sensitive home builder stocks. The 10-year Treasury note yield came off yesterday's one-month low, but yields are likely to remain rangebound in the near-term, said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). 

Small caps led Tuesday's rally. The Russell 2000 (RUT) climbed more than 2% and the S&P 500 index closed above its 50-day moving average for the first time since November 14, a possible sign of technical resilience. More than 50% of S&P 500 stocks are above their 50-day moving averages, up from 31% late last week. For bullish investors, this improved breadth is good news, and so was the ability to rally Tuesday without help from Nvidia, which climbed 2% this morning. Volume across the market might be light today, exacerbating moves, as participants head out ahead of Thanksgiving tomorrow. 

1. AI space gets more complex: Alphabet (GOOGL) and Broadcom (AVGO) spent the last few sessions outpacing AI leader Nvidia (NVDA), which is down double digits from recent highs. While Nvidia delivered solid guidance, it's grappling with challenges to its long reign, and investors appear besotted with competitors. Alphabet's Gemini 3 AI model introduced last week "leapfrogged rivals," according to The Wall Street Journal, though it may threaten OpenAI more than Nvidia. Broadcom got a boost along with Alphabet yesterday on news that Meta Platforms (META) is considering Alphabet's chips, which were designed with Broadcom's help. One advantage of Alphabet's less sophisticated chips is price, when until now Nvidia could essentially dictate prices and protect its margin. That may get harder. "There has been increased investor discernment within the AI investment space over the past couple months, rather than the euphoric sentiment from August and September where the AI tide lifted all boats," said Nathan Peterson, director of derivatives research and strategy, SCFR. "I think it's 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 (ORCL) vs Alphabet performance over the past 60 days." Oracle reports December 8, a useful look at near-term AI sentiment. 
    
2. Data put Fed in a vice: Fed speakers recently tilted their narrative toward another rate cut next month, one reason odds climbed above 85% today, according to the CME's FedWatch Tool. Historically, figures this high two weeks from a decision suggest the Fed will do what investors expect, and the central bank typically tries not to surprise. Of note, payrolls processor ADP—which raised questions about labor market stability by reporting an average weekly drop of 13,500 in the four weeks leading into early November—covers private-sector jobs only, leaving out federal workers. The government was shuttered in October and part of November, perhaps hurting jobs growth, though data for then won't be available until mid-December after the Fed meeting. Still, yesterday's September Producer Price Index (PPI) didn't show much retreat. "PPI came in higher than expected," said Kathy Jones, chief fixed income strategist, SCFR. "A Fed rate cut in December is still a toss-up." Some of Tuesday's optimism around Fed policy followed a Bloomberg report that White House National Economic Council Director Kevin Hassett—who favors lower rates—is front runner for Fed chairman.
    
3. Credit spread climbs, possibly indicating more risk: Credit spreads—the difference in yields between corporate bonds and Treasuries that can indicate economic wobbles when they rise—matched their five-month high last week. Spreads often climb when prospective bondholders demand higher yields to compensate for the increased risk of a failed repayment. "The stock market selloff and expected bond market issuance from AI expansion both have weighed on the corporate bond market," said Collin Martin, head of fixed income research and strategy, SCFR. However, this shouldn't necessarily deter investors from investing in at least some high-yield bonds. "Investors can still consider high-yield bonds in moderation but be cognizant of the underlying credit ratings of a given strategy," Martin said. "The high-yield default rate may stay elevated, but those most at risk of default make up a small share of the market."

Deere (DE) stumbled 5% in early trading after the agricultural machinery firm delivered a financial outlook that failed to impress investors. The company continues to be hurt by U.S. tariffs on imports of steel and aluminum but estimates that 2026 "will mark the bottom of the large ag cycle."
 

Dell (DELL) gained nearly 5% in pre-market action after earnings beat expectations, though revenue came up just short. Guidance for solid fourth-quarter revenue well above consensus appeared to give shares a lift. The company said AI momentum is accelerating in the second half of the year.
 

Slumping Nvidia (NVDA) rose 1% in pre-market trading, possibly reflecting a bullish note from Wedbush, which argued that despite momentum from Alphabet and Broadcom, the AI market "starts and ends with Nvidia today" and that's not changing for a few years.
 

Alphabet took a breather early today, falling 1% in pre-market trading. Shares are up 15% so far this month.
 

Petco (WOOF) soared more than 16% before the open. The company beat earnings expectations and reaffirmed its fiscal 2025 sales outlook, but sales at stores open a year or more fell 1.4%. 
 

Urban Outfitters (URBN) popped 15% in pre-market action after earnings and revenue impressed investors. Total retail segment net sales rose 9.6% year over year. This followed strong outings from other retailers the last two days.

AutoDesk (ADSK) climbed nearly 8% ahead of the open as earnings and revenue topped consensus views and the company's guidance for fourth-quarter EPS and revenue exceeded expectations. Billings rose 18% in the quarter.
 

Nutanix (NTNX) plunged 11% in pre-market trading. The cloud computing firm that sells software for data centers reported earnings in line with expectations but issued lower-than-expected guidance for the second fiscal quarter and fiscal 2026.

Oracle (ORCL), which has been hurt by worries about heavy AI spending, climbed 4% ahead of the open after a positive note from Deutsche Bank suggesting the recent pullback provides an attractive entry point and reiterating its Buy rating.

Bitcoin (/BTC) fell nearly 1% in early trading but prices appeared to be carving a near-term floor after touching $80,000 briefly last week. Softer crypto trading is sometimes a signal of risk-off sentiment climbing across the market.

Gold (/GC) rose 0.5% to near two-week highs as U.S. rate cut chances climbed.
 

Retailers including Kohl's (KSS), Macy's (M), Gap (GAP), Best Buy (BBY), and Home Depot (HD) performed well Tuesday as earnings from Kohl's and Best Buy beat analysts' estimates. Abercrombie & Fitch (ANF) rose more than 30% and Kohl's more than 40%.

The Cboe Volatility Index (VIX), which popped briefly to one-month highs above 28 last week, fell below the benchmark 20 level to below 19 on Tuesday. Typically, levels under 20 are associated with less investor caution and a better outlook for stocks, though that's far from guaranteed. VIX futures remain in contango, with contracts for early next year rising above 21 by February and then above 22 by April.

Say what? Explaining contango and backwardation: The terms may be common, but many investors might benefit from a refresher on contango and backwardation and what they represent in terms of the futures curve slope. Understanding these can have a big impact on the profitability and risk of several trading strategies, so read more in our latest futures article.

Holiday golf update: In Schwab's latest Invested in the Game podcast, Mason Reed speaks with Chad Pfeifer and Mike Browne, who share their compelling personal stories as injured veterans, revealing how golf became a powerful avenue for both recovery and competitive spirit after their military service.

Options rolling: A trader can choose to roll an options trade, which means simultaneously closing an existing position and opening a new one with a longer expiration and possibly a different strike price. Doing this can help extend winning strategies or manage losing ones. Learn more in Schwab's new options trading video.

The small-cap Russell 2000 index (RUT–candlesticks) continued its advance Tuesday from last week's sharp skid, clawing above the 50-day moving average of 2,445 (blue line) after falling below it earlier this month for the first time since May. Growing hopes of a rate cut helped small caps, though long-term fundamentals—including a larger share of debt coming due over the next four years—keep them quite interest-rate sensitive. Also, many RUT companies have negative earnings. However, profits for the small- and mid-cap S&P 600 were on track earlier this month to grow 14% in the third quarter, Bloomberg reported, slightly outpacing 13% growth for S&P 500 companies. 

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

November 27: U.S. markets closed for Thanksgiving holiday.

November 28: No major data or earnings expected; U.S markets close at 1 p.m. ET.

December 1: November ISM Manufacturing Index, October construction spending

December 2: Expected earnings from Marvell Technology (MRVL) and CrowdStrike (CRWD).

December 3: ADP November employment, November ISM Services Index, September industrial production, and expected earnings from DollarTree (DLTR), Macy's (M), Salesforce (CRM), and Snowflake (SNOW).