Stocks closed sharply higher yesterday with the Nasdaq and S&P 500 leading the way with gains of 2.64% and 1.58% respectively.

After taking a backseat to the small-caps and mid-caps over the last few weeks, they came roaring back yesterday on strong earnings.

Stocks got an additional lift after the FOMC Announcement and Fed Chair Press Conference.

As expected, the Fed left interest rates unchanged. But they left the door open to cutting rates at their next meeting in September.

Although, Mr. Powell made sure to emphasize that no decision has been made yet on when. And he reiterated that they will remain data dependent.

While commenting that they want to see 'more good' data, so as to feel more confident that inflation was on its way back down to 2%, he noted that included more than just better inflation data. Employment data is also a main area they are looking at given their dual mandate of maintaining price stability (low inflation) and maximum employment.

He acknowledged that considerable progress has been made on inflation. And while tight employment pressures have eased, the unemployment rate at 4.1% is still historically low.

With the Fed noting the importance of the labor market in the rate cut equation, investors will be paying even more attention than usual to Friday's Employment Situation report.

In other news, yesterday's MBA Mortgage Applications fell -3.9% w/w with purchases off -1.5% and refi's down -7.2%.

Pending Home Sales rose 4.8% m/m vs. last month's -1.9% and views for 1.1%. The index came in at 74.3 from 70.9.

The Chicago PMI slipped to 45.3 from last month's 47.4, but beat the consensus which expected 44.3.

The Employment Cost Index rose 0.9% vs. last month's 1.2% and came in under the estimate for 1.0%. The y/y rate was at 4.1% vs. last month's 4.2% print.

And the ADP Employment Report showed 122,000 new private payroll jobs were created last month, less than the previous month's 155K and less than the 154K that was expected.

We also got more earnings. After the close yesterday we heard from Meta which posted a 9.79% positive EPS surprise and a 1.91% positive sales surprise. That translated to a quarterly EPS growth rate of 59.8% vs. this time last year, and a sales growth of 22.1%. They were up more than 7% in after-hours trade.

ARM Holdings also reported after the close and posted a 14.3% positive EPS surprise and a 3.54% positive sales surprise. That equated to a quarterly sales growth rate of 39.1% vs. this time last year. They were up 8.43% in the regular session before earnings, but were trading -10.52% lower following earnings in after-hours.

We've got another busy day of earnings today with 489 companies on deck to report with Toyota, ConocoPhillips and Booking Holdings going before the open, and Apple, Amazon and Intel reporting after the close.

It'll be a busy day on the economic report front as well with Weekly Jobless Claims, the Challenger Job-Cut Report, the PMI Manufacturing Report, the ISM Manufacturing Index, Construction Spending, and the Productivity and Costs report.

And we'll see if the market can build upon yesterday's sharp gains.

See you tomorrow,