Stocks closed mixed on Friday, but mostly higher for the week. In fact, last week made it 3 up weeks in a row, with only the small-cap Russell 2000 missing the cut.

Last Friday's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge, came in mostly in line, and a bit better in some cases, than expected. The headline number showed a 0.1% m/m increase vs. last month's 0.2% and views for 0.1%. The y/y rate came in at 2.2% vs. last month's 2.5% and estimates for 2.3%. The core rate (ex-food & energy) was up 0.1% m/m vs. last month's 0.2% and views for the same, while the y/y rate came in at 2.7% vs. last month's 2.6% and the consensus for 2.7%.

This confirmed that progress on inflation continues, and helped underscore the Fed's decision to begin their rate-cutting cycle with an outsized 50 basis point cut vs. 25 was not misplaced.

The Fed also forecast further rate cuts with expectations for the Fed Funds rate to drop to 4.4% by year's end (presumably with two more 25 bps cuts in November and December), and then getting all the way down to 3.4% by the end of next year.

Although, 2024's timeline and target might very well accelerate and deepen as Fed Funds traders are placing odds at 53.3% that the Fed cuts by 50 bps in November vs. 25. And that still includes a near certainty (99.9%) for some type of additional cut in December as well.

This week's (Friday, 10/4) Employment Situation report will help inform the Fed's next move. Especially since inflation risks have receded while labor risks have increased.

In other news, last Friday's International Trade in Goods report showed the trade deficit in goods shrink to -$94.3 billion vs. last month's -$102.8B and views for -$100.0B. Imports shrank by -1.6% vs. last month's 2.3%, while exports increased by 2.4% vs. last month's 0.0%.

Retail Inventories were up 0.5% m/m vs. last month's 0.8% pace.

Wholesale Inventories were up 0.2% m/m vs. last month's 0.3% and estimates for 0.2%.

And Consumer Sentiment rose to 70.1 vs. last month's 69.0 and views for the same. The year-ahead inflation expectations, which is also part of that report, came in at 2.7%, in line with last month and expectations.

Today we'll get the Chicago PMI, and the Dallas Fed Manufacturing Index.

Another thing the market will be watching is the possibility of a dockworkers strike that could take place on October 1^st (Tuesday), if an agreement isn't reached by day's end today. This could affect ports on both the east and west coasts.

In the meantime, we have one more day left in September. And all of the indexes are on pace to close higher for the month.

Then we begin Q4, which is considered the best quarter for stocks.

After a spectacular year, the market looks set to end on an even stronger note.

See you tomorrow,