Stocks closed mostly higher yesterday to start the week. Only the small-cap Russell 2000 finished lower, giving up -0.34%. But the Dow and the S&P 500 each notched another new all-time high close.

After all of the indexes closed higher last week for the second week in a row, most are off to another good start in an effort to make it 3 up weeks in a row.

But we have lots of week left with plenty of important reports.

Yesterday's Chicago Fed National Activity Index improved to 0.12 vs. last month's -0.42 and views for 0.0.

And the PMI Composite Flash report showed the Composite Index at 54.4, just under last month's upwardly revised 54.6 (from 54.1), but above the consensus for 53.0. The Manufacturing Index was at 47.0 vs. last month's 47.9 and views for 48.5, while the Services Index was at 55.4 vs. last month's 55.7 and estimates for 55.2.

Today we'll get the Case-Shiller Home Price Index, the FHFA House Price Index, the Richmond Fed Manufacturing Index, and Consumer Confidence.

But the report everybody is really waiting for is Friday's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge.

Even though the Fed has already commenced their rate-cutting cycle with last week's 50 basis point inaugural cut, and forecast rates dropping to 4.40% by year's end, and to 3.4% by the end of next year, they insist they will remain data dependent. As such, Friday's report will show if we continue to make progress on inflation.

After Friday's PCE report, the focus will shift to next week's Employment Situation report by the Bureau of Labor Statistics (BLS). With inflation on the decline, the BLS report might very well be the bigger of the two as it will show if we are still headed for a soft landing with job growth slowing but still solid, or whether we could be in for a rougher landing with jobs dropping more than expected.

Regardless of which may be the most important report, they are both important measures for the Fed given their dual mandate of price stability (low inflation), and maximum employment.

Another thing to watch for this week is if Congress can pass their spending bill (or at least a continuing resolution, i.e., CR) by the end of the month (Monday, 9/30) to avoid a government shutdown. The House and Senate reached an agreement over the weekend. The House will put it up for a vote on Wednesday. If successful, it'll then go to the Senate.

In the meantime, we'll see if the market can continue to build on last week's extended rally.

See you tomorrow,