The interest rate outlook will come back into focus next week with key inflation data and Federal Reserve meeting minutes coming out ahead of Thanksgiving, as investors wrap up a major month for markets following President-elect Donald Trump’s election victory. The October personal consumption expenditure (PCE) price index set to release Wednesday could dent already-dimming hopes for a December rate cut if it comes in hotter than expected. It would also add to concerns — revived after recent consumer and producer prices data — that the last mile toward the central bank’s 2% inflation target will be the most challenging. Economists expect the PCE could show sticky inflation. The inflation rate is expected to have increased 0.2% month over month and 2.3% year on year. That would be up slightly from 0.18% and 2.1% the previous month , according to FactSet consensus estimates. Core inflation, which excludes volatile food and energy prices, is expected to have increased by 0.3% and 2.8% on the month and year, respectively, up from 0.25% and 2.7% previously. .SPX YTD mountain S & P 500 For investors, the challenge will lie in whether stocks can take any uptick in the data, and any changes in interest rate cut expectations, in stride — especially during a holiday-shortened trading week that could mean lower trading volumes and greater volatility to close out November. U.S. markets will be closed Thursday for Thanksgiving. They also close at 1 p.m. ET on Friday. “This might be one of the last big key pieces of data that they that they look at before kind of finalizing their opinions on this, and so that’s going to be a big deal,” said Luke O’Neill, portfolio manager of the Catalyst Dynamic Alpha Fund. “If it comes in a little bit hotter than expected, I would certainly anticipate that tilts toward less chance of a cut in December.” Stocks were last on pace for a winning week on Friday, with the Nasdaq Composite and S & P 500 rising 1.6% each. The Dow Jones Industrial Average outperformed week to date, up 1.8%. The major benchmarks were also on track to close out the month with strong gains, each up more than 4%. Commitment to lower interest rates The FOMC minutes for the November meeting will also be closely scrutinized by investors, as strong growth and sticky inflation have markets repricing their expectations for how much and how quickly the Fed will cut interest rates. Markets were last pricing in a roughly 60% chance of a quarter-point cut in December, down from about 70% even a month ago, according to the CME FedWatch tool. “The exact nature of when the Fed cuts and when they pass for a meeting and whatnot, is a little bit less important than a commitment to the path,” O’Neill said. “Which is why the minutes are going to be helpful to see next week.” “Our thought is that we’re probably in a little bit of a higher-for-longer rate environment. I don’t think we’re going to get rates, you know, the front end cut down to 3% terminal rate like markets were expecting a little while ago. Now, I think the current expectation is more like 3.75% for a terminal rate,” O’Neill said. “That seems pretty reasonable to us.” So long as the Fed remains committed to lower interest rates, the investment case for a broadening of the rally in 2025 could be intact, he said. Smaller-cap stocks, such as midcaps, would also outperform. Rosy expectations Even with the interest rate cut expectations coming in, investors are optimistic on the direction for stocks to close out the year and into 2025. That’s due to a strong underlying economy, earnings growth potential and the strength of the artificial intelligence trade. Several strategists came out with their 2025 S & P 500 targets, with virtually all shops thus far anticipating a roughly 10% gain or more for the broader index. Many consider such an advance reasonable in the third year of a bull market, when the strength of returns is typically lower. The S & P 500 surged 24% in 2023, and is up more than 24% this year. Goldman Sachs’ David Kostin this week said he expects the S & P 500 can end next year at 6,500. Morgan Stanley’s Mike Wilson said the same. BMO Capital’s Brian Belski expects the broader index can jump to 6,700, while UBS forecasts a rise to 6,400. “As we look at all the sequencing of events between election, Fed, inflation, interest rates, consumer spending, so far it lines up relatively supportive of equity prices moving higher into year end, and into 2025,” said U.S. Bank Asset Management Group’s Tom Hainlin. Elsewhere next week, there is housing data, a sticking point in pricing pressures not coming down, as well as earnings from a slew of AI-related names following Nvidia’s results this week, including Dell Technologies and CrowdStrike. One thing investors should consider: Volume will likely be lower due to the holiday next week. This could lead to sharper moves due to the lack of liquidity in the market. Week ahead calendar All times ET. Monday Nov. 25 8:30 a.m. Chicago Fed National Activity Index (October) Earnings: Agilent Technologies Tuesday Nov. 26 8:00 a.m. Building Permits final (October) 9:00 a.m. FHFA Home Price Index (September) 9:00 a.m. S & P/Case-Shiller comp.20 HPI (September) 10 a.m. Consumer Confidence (November) 10 a.m. New Home Sales (October) 10 a.m. Richmond Fed Index (November) 2:00 p.m. FOMC Minutes Earnings: HP , Dell Technologies , CrowdStrike , NetApp , J. M. Smucker , Analog Devices , Best Buy , Autodesk Wednesday Nov. 27 8:30 a.m. Durable Orders (October) 8:30 a.m. GDP second preliminary (Q3) 8:30 a.m. Initial Claims (11/23) 8:30 a.m. Personal Income (October) 8:30 a.m. Wholesale Inventories preliminary (October) 10:00 a.m. PCE Deflator (October) 10:00 a.m. Personal Consumption Expenditure (October) 10:00 a.m. Pending Home Sales Index (October) 10:00 a.m. Pending Home Sales (October) Thursday Nov. 28 8:30 a.m. Continuing Jobless Claims (11/16) Events: NYSE closed for Thanksgiving Day. Friday Nov. 29 9:45 a.m. Chicago PMI (November) Events: NYSE closes 1 p.m. — CNBC’s Jeff Cox contributed reporting.