Stocks closed mostly lower yesterday, except for the Dow, which eked out a small gain of 0.16%, and made a new all-time high and close in the process.

Last week's FOMC Minutes, which showed "the vast majority" of participants leaning towards cutting rates in September, along with Fed Chair Jerome Powell's Jackson Hole speech, when he said "the time has come for policy to adjust," has set the stage for the long-awaited rate cuts to finally begin in less than 3½ weeks from now.

Of course, nothing is a done deal until it happens. But Fed Funds traders have placed a 100% certainty that it's coming with a 68% chance of a 25 basis point cut, and a 32% chance of a 50 basis point cut.

Aside from how big the first cut might be, the next big question(s) will be what happens afterwards? Will they cut again in November and December? Or will they pause for a few months to see how that goes and to collect more data? (As you know, the Fed continues to insist they will remain data dependent.)

As for data, there's plenty more to come even before the next FOMC Announcement on 9/18.

On Friday, 8/30 we'll get another look at inflation with the Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge. While the y/y headline number and core rate (ex-food & energy) are each expected to increase by one-tenth of a percent to 2.6% and 2.7% respectively (in contrast to the latest core CPI and PPI reports, which ticked down by one-tenth and six-tenths of a percent), that should not be enough to derail plans for September's cut.

And that's because, according to the Fed, the risks for inflation have receded, while the risks for a slower-than-expected labor market have increased.

That's also why next week's Employment Situation report on Friday, 9/6 is so important. After the last weaker-than-expected report, which sent stocks reeling, combined with last week's massive downward revision of 813,000 fewer jobs being created over the previous 12 months, the labor market has now, apparently, become the top focus for the Fed. And another weaker-than-expected BLS (Bureau of Labor Statistics) report could increase the odds for a 50 bps rate cut rather than 25.

Before any of that, however, we'll get earnings from semiconductor giant NVIDIA on Wednesday, 8/28 after the close. They are one of the Magnificent 7 stocks, and the best performer of the bunch with an outsized gain this year, so far, of over 155%.

But even before that, we've got a full slate of economic reports out today, including the Case-Shiller Home Price Index, the FHFA House Price Index, Consumer Confidence, and the Richmond Fed Manufacturing Index.

While the Dow made new highs yesterday, the other indexes are within striking distance of their recent highs.

And it won't take much to see them breakout to new highs and begin their next leg up.

See you tomorrow,