Here is Schwab's early look at the markets for Tuesday, December 2.

Today's key news comes after the close with earnings reports from Marvell Technology and CrowdStrike. Though neither is large compared to the mega caps, both could help investors better understand current trends. The Marvell report is particularly relevant after the semiconductor firm shared a weak outlook and missed estimates on data center revenue last time it reported, while CrowdStrike offers a view of the cybersecurity space.

On Monday, stocks declined moderately to end a five-session win streak for the S&P 500 index, hurt partly by a big drop in cryptocurrency values that might reflect declining speculative sentiment.

Data today are light, but pick up tomorrow with ADP November employment and November ISM services data. In the absence of official November jobs data from the government, the ADP number could have a bigger-than-normal impact. So could Thursday's Challenger job cuts data. Analysts expect anemic ADP jobs growth of 10,000.

Yesterday brought a disappointing ISM Manufacturing Index that showed a ninth straight month of contraction at 48.2% compared with expectations for 49% and October's 48.7%. Anything under50 indicates contraction. To make matters worse, the prices paid component rose and new orders fell month over month. The employment number was quite low at 44%. None of this is moving in the right direction if you're bullish about the market, and traditionally manufacturing data has sometimes carried through to company balance sheets.

Manufacturing data from China over the weekend also showed another contraction, one of several developments hurting Asian stocks Monday that carried into Monday's U.S. session.

The main piece of bearish news out of Asia was growing fear of a Bank of Japan, or BOJ, rate hike at its meeting later this month. Odds of that topped 80% in trading on Monday, Reuters reported, after BOJ Governor Kazuo Ueda said the central bank "will consider the pros and cons of raising the policy interest rate."

Back in 2024, when Japan raised rates more than expected, U.S. Treasury yields climbed and growth stocks, including tech, fell sharply in what was known as the "yen carry" sell-off.

The Japanese bond market could create volatility as higher yields there attract domestic investors to repatriate money back to Japan, often by selling U.S. stocks. However, things have changed since the mid-2024 selloff, which occurred when speculators had a large net-short yen position. That wasn't the case in mid-October, the last update from the Commodity Futures Trading Commission, or CFTC, before the government shutdown prevented collection of fresh positioning data.

"Without extreme shorts--and related short covering that results in forced trading-- we are unlikely to repeat the 2024 volatility," said Michelle Gibley, director of international equity research and strategy, Schwab Center for Financial Research. "However, it is possible that BOJ hikes and Japanese government bond yield increases result in selling of risky assets globally--but is more likely to occur at a gradual pace."

The 10-year U.S. Treasury note yield jumped seven basis points to 4.09% Monday after reaching one-month lows below 4% last week. This partly reflected the Japan news but also might be due to the higher prices-paid component of the ISM Manufacturing index.

Another source of pressure on Treasuries—which move the opposite direction of Treasury yields—is growing expectation that President Trump could soon announce his pick to replace Fed Chairman Jerome Powell when his term expires in May. News reports last week zeroed in on Kevin Hassett, director of the National Economic Council and a known policy dove.

While it may seem ironic that the 10-year yield rose on expectations of dovish Fed policy, the Fed really doesn't have firm control of long-term yields like the 10-year. Those reflect elevated inflation worries and concerns about the growing U.S. debt. Dovish Fed policy might raise concerns about inflation, and U.S. debt could rise if government spending continues growing.

Inflation returns to the front burner Wednesday when the November ISM Services Index bows following an October reading that showed swelling prices. On Friday, the government releases the September Personal Consumption Expenditures (PCE) price index, the Fed's favored inflation report. Analysts expect modest increases, and chances of a rate cut a week from tomorrow were 85% as of late Monday, according to the CME FedWatch Tool.

Volatility ticked back up Monday after falling sharply last week. Near term volatility looks heightened compared to longer-term volatility, suggesting a period of choppiness could be in place before year-end. This may reflect the central bank meetings ahead. Still, the Cboe Volatility Index, or VIX, remains below the 20 level often associated with sharp moves in the market.

The rise in Treasury yields had a negative follow-through Monday for some of last week's outperformers, notably the Russell 2000 index of small-cap stocks, which are rate sensitive.

Overall, however, there's still evidence of "buy the dip" sentiment, and the path of least resistance appears to be higher as seasonally, December is often a solid month. Technically, the S&P 500 index recently bounced off a key support level near 6,550. Resistance is likely at the all-time high of 6,920. Should stocks show weakness, the first support level to watch could be 6,770, where the index peaked on November 20. It would be good for the S&P 500 index to hold that level.

In individual trading Monday, Marvell Technology rose nearly 3% ahead of this afternoon's earnings report, where guidance will be key after a disappointing outlook the last time the firm reported. That was in August, when shares fell 18% as data center revenue also fell short of expectations, CNBC reported at the time. Shares spiked 46% between that earnings report and Monday.

Semiconductors were mixed yesterday, with gains of more than 1% for slumping Nvidia shares and an even stronger 5% rise for Nvidia partner CoreWeave. Nvidia fell 12% in November amid competitive concerns despite solid earnings and guidance. . The company announced a strategic partnership Monday with Synopsys that involves Nvidia investing $2 billion in Synopsys' stock. Synopsys rose 5%.

There were also some losses in AI-related stocks, with Broadcom and Super Micro Computer each losing more than 2%. This could reflect profit taking, though SMCI lost ground last month.

Bitcoin futures plunged nearly 6% Monday, hurting shares of crypto-related stocks including Coinbase, Strategy, and Circle Internet Group. On the charts, Bitcoin appears to be carving a low in the $80,000 to $85,000 range, bouncing after the November 21 dip to just above $80,000.

Yesterday saw weakness in home builder, automaker and many consumer stocks--as well as financials--following the rise in Treasury yields. After last week featured strength broadening beyond tech, only two of 11 S&P 500 sectors gained Monday, energy and consumer discretionary. Info tech came close to even, while rate-sensitive utilities and health care finished last. Industrial stocks had a tough day, too, hurt in part by the weak manufacturing data and rise in prices paid for manufacturers.

The Dow Jones Industrial Average® ($DJI) fell 427.09 points Monday (-0.9%) to 47,289.33; the S&P 500 index (SPX) gave back 36.46 points (-0.53%) to 6,812.63, and the Nasdaq Composite® ($COMP) dropped 89.76 points (-0.38%) to 23,275.92.