Stocks closed narrowly mixed yesterday with the Dow eking out a small gain, while the S&P and Nasdaq finished with small losses.

It was a busy day for economic reports yesterday.

MBA Mortgage Applications were up 0.3% w/w with purchases up 4.7%, while refi's were down -8.9%.

The second estimate for Q3 GDP exceeded estimates yet again, this time coming in at 5.2% vs. the first estimate of 4.9% and views for the same.

The International Trade in Goods report saw the trade deficit expand to -$89.8 billion vs. last month's -$86.8B and the consensus for -$86.7B. Imports were flat at 0.0% while exports fell -1.7%.

Retail Inventories came in at 0.0% in October vs. September's downwardly revised 0.4% (from 0.9% originally). Wholesale Inventories slipped -0.2% vs. September's upwardly revised 0.1% (from 0.0%), and estimates for 0.2%.

The Beige Book report showed consumer spending slowing, although travel and tourism was strong. Manufacturing was mixed with strength in some areas while weakening in others. And commercial real estate remained soft.

The Survey of Business Uncertainty report showed U.S. firms expecting sales growth to expand by 4.14% in the next 12 months vs. last month's pace of 4.13%, while they see unemployment growth growing by 4.16% vs. last month's 4.09% pace.

And Corporate Profits (after tax) for Q3 were up 0.5% on a y/y basis vs. last quarter's -7.8%. With inventory & consumption adjustments, it came in at -1.7% vs. last month's pace of -4.1%.

Today we'll get Weekly Jobless Claims, the Chicago PMI, and the Pending Home Sales Index.

But the report everyone is really waiting for is this morning's Personal Consumption Expenditures (PCE) index. That's the Fed's preferred inflation gauge. And it will be the last look at inflation we'll get before the next FOMC announcement on 12/13.

The consensus is calling for a 0.1% m/m change in the headline number, and 3.1% y/y vs. last month's 3.4%. The core rate (ex-food & energy) is expected to be up 0.2% m/m, with the y/y rate at 3.5% vs. last month's 3.7%.

If so, that will show inflation continues decline, and will be in line with decreases we saw two weeks ago in the CPI and PPI reports.

Most believe the Fed will stand pat on rates at their next meeting in 2 weeks. In fact, Fed Funds traders have a 95.8% probability that they'll pause yet again.

But what traders will be listening for are hints from the Fed on when they expect to begin cutting rates next year, and by how much. They have previously said they expect to cut rates by -50 basis points. But more and more Fed watchers are expecting 5 quarter point rate cuts next year (with some calling for even more -- UBS is expecting a -275 basis point cut).

In the meantime, we'll get plenty of other economic reports before the next Fed announcement, including next week's Employment Situation report on 12/8.

With 2 more trading days left in the week, the indexes are essentially flat (the Dow and Nasdaq are slightly higher, while the S&P is slightly lower).

This comes on the heels of 4 up weeks in row and a blistering November rally.

With Q4 typically being the best quarter of the year, it looks like stocks are poised to keep the rally going in the final 4+ weeks of the year.

See you tomorrow,