The big three indexes closed higher yesterday to start the second half of the year. But the small-cap Russell 2000 and mid-cap S&P 400 were lower.

Last week's Personal Consumption Expenditures (PCE) index, which showed inflation heading back down again, is good news. And it confirmed what the CPI and PPI reports showed a few weeks ago.

While nobody is expecting that to lead to a rate cut at the Fed's next FOMC meeting at the end of July, it does add to the data points the Fed has said they need to see to feel confident that inflation is indeed on a trajectory down to their 2% target.

Yesterday's PMI Manufacturing report came in at 51.6, which was above last month's 51.3, even though it was a tad under views for 51.7.

The ISM Manufacturing Index came in at 48.5, missing both last month's 48.7 and estimates for 49.1.

And Construction Spending was off -0.1% m/m vs. last month's 0.3% and the consensus for 0.3%. On a y/y basis it was up 6.4%, although below last month's 7.6% pace.

Today we'll get the Job Openings and Labor Turnover Survey report (or JOLTS for short).

And we'll hear from Fed Chair Jerome Powell as he participates in a Policy Panel Discussion at the European Central Bank (ECB) Forum on Central Banking 2024, in Sintra, Portugal.

It will be a busy week of reports. But the main event this week will be Friday's Employment Situation report.

Recent Fed statements suggest they are looking at both inflation and evidence that the labor market is cooling before giving the green light on rate cuts.

In fact, just last month, Federal Reserve Governor Christopher Waller, despite seeing several reports showing that inflation is heading back down, said "in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy."

Translation, if the jobs market keeps coming in hotter than expected, we're going to need to see many more months of easing inflation before we cut rates.

So all eyes will be on Friday's jobs report.

Note, we'll have another shortened trading week this week as the markets will be closed on Thursday for the July 4th (Independence Day) holiday. Trading will resume on Friday, but is likely to be lower volume as many will turn it into a 4-day weekend.

The S&P and Nasdaq are trading within striking distance of their all-time highs from last week.

And it won't take much to see them breakout to new highs.

See you tomorrow,