Schwab Network

Costco (COST) is a great "temperature check" for the U.S. consumer, says Melissa Otto, emphasizing the company's earnings as the next barometer after Thursday's trading session. She explains how macro movers, including the climb in crude oil prices, serve as a headwind for Costco's forward momentum. Tom White offers an example options trade for the retail giant's stock.

Investors weren't hungry for McDonald's (MCD) growth strategy announced during the company's investor day. The stock fell to 4-year lows off the announcement. Marley Kayden takes investors through the fast-food giant's plans to draw in a larger dine-in crowd and push deeper into the beverage space. Analysts aren't entirely convinced the strategy will offer long-term value for the stock. Joe Tigay offers an example options trade for McDonald's.

S&P 500 (SPX) bulls face a critical level to hold, argues @CharlesSchwab's Rachel Dashiell. She takes investors through the index's 4-month price action to highlight how weaker market breadth is putting a recent breakout at risk. Rachel then looks into a slice of the S&P through the energy sector, pointing out an "extreme correlation" with the rally in 10-year Treasury yield that she believes has risk of unwinding.

Kevin Green highlights key levels investors need to watch in the S&P 500 (SPX) futures as Treasury yields tap multi-decade highs. He talks about how the latter is creating a drag on a recent breakout from a bullish flag pattern. On the international headlines, KG talks about the significance (or lack thereof to equities) to the U.S. and China extending their trade truce into January as President Trump and China President Xi Jinping begin their summit. He brings his discussion back to the U.S. by focusing on what he calls a "good" new home sales report.

Tony Blagrove discusses the AI buildout and how its shaping the earnings dynamics for the stock market's biggest companies, including Nvidia (NVDA). He also addresses cyclical financing concerns around the Mag 7 giant, arguing the company "will get hurt" should any significant weakness in the AI trade materialize. Tony adds that bonds "are extremely attractive" at today's prices amid all the geopolitical and economic uncertainty.

EPS and sales both made a slight miss in earnings for Darden Restaurants (DRI), though as Diane King Hall points out, the company still sees strength in Olive Garden and Longhorn Steakhouse. MGM Resorts (MGM) sold off sharply after Diller's withdrew its takeover bid, while Everpure (P) hit a new all-time high after it issued positive guidance.

David Waddell addresses the Fed and heightening interest rate hike probabilities as crude oil prices stay elevated and Treasury yields continue to rise to historic levels. That said, he believes earnings won't take as big of a hit as other analysts fear. David also makes a bullish case in software companies.

"Be careful at these levels" across Treasury yields, says Kevin Hincks, with the 10-year crossing 5% once again and the 30-year crossing 5.25%. The latter is at its highest level since 2004. Kevin explains how Fed speakers giving their updates on the state of the U.S. economy and supply shocks from crude oil will raise questions for long-term growth. He says the labor market "remains strong" when reviewing the latest jobless claims print. Kevin then outlines expectations for the meeting between President Trump and China President Xi Jinping.

Costco (COST) shares have fallen behind performance from wholesale store peers like Target (TGT) and Walmart (WMT). Rick Ducat turns to his technical analysis in the stock as the company readies to report earnings after Thursday's close. He turns to an example options trade for the retail giant.

Jeffrey Cole, director at the Center for the Digital Future, doesn't see some Mag 7 companies leading the future of tech. "Most companies really aren't ready to understand disruption," says Jeffrey, explaining how historic disruptors like Alphabet (GOOGL) are now being disrupted by new tech like OpenAI's ChatGPT. He points to Big Tech giants like Apple (AAPL), Microsoft (MSFT), and Meta Platforms (META) as key targets at risk. Jeffrey sees SpaceX (SPCX), Anthropic, Nvidia (NVDA), and even Intel (INTC) as companies that will continue to disrupt the stock market.