Stocks closed lower yesterday with all of the major indexes in the red, albeit unevenly. The small-cap Russell 2000, which was the biggest gainer on Monday with 1.47%, was the biggest decliner yesterday shedding -1.80%. The Nasdaq, however, only gave up -0.09%, and is nearly unchanged for the week.

After heady gains following last week's election, stocks took a breather yesterday.

Before the open yesterday, Shopify reported earnings and posted a positive EPS surprise of 33.3%, and a positive sales surprise of 2.59%. That translated to a quarterly EPS growth rate of 50% vs. this time last year, and a sales growth of 26.3%. They soared by 21.1% in the regular session following earnings.

Sea Limited also reported before the open and posted a negative EPS surprise of -8.47%, but a positive sales surprise of 3.59%. That equated to a quarterly sales growth rate of 23.6% vs. 4 quarters ago, and their earnings came in at 24 cents vs. last year's -26 cents. They gained 10.4% in the regular session after earnings.

After the close we heard from Spotify, which posted a negative EPS surprise of -9.14%, but a positive sales surprise of 0.36%. That translated to a quarterly EPS growth rate of 341% vs. this time last year, and a sales growth of 20%. They were up 2.24% in the regular session, and up more than 7% in after-hours trade.

Today there's another 222 companies on deck to report, including Tower Semiconductor before the open, with Cisco and Tetra Tech going after the close.

In other news, the NFIB Small Business Optimism Index rose to 93.7 vs. last month's 91.5 and views for 91.7.

Yesterday, former Federal Reserve Bank of Cleveland President, Loretta Mester, said that she thought the Fed "is probably not going to have as many rate cuts next year as was assumed or expected in September." She thinks that "next year, the pace of cuts will be affected by where they're seeing fiscal policy."

Nonetheless, as it stands, the markets are currently predicting another 25 basis point cut in December (in line with the Fed's recent forecast), and then another 100 bps of cuts in the first half of 2025, along with another 25 bps in the second half. That would put the Fed Funds rate at a midpoint of 3.13%. The Fed is 'only' forecasting 100 bps worth of cuts next year, putting the Fed Funds rate of 3.38%.

Today we'll get another look at inflation with the Consumer Price Index (CPI) inflation report. The headline number is expected to come in at 0.2% m/m vs. last month's 0.2%. The y/y rate is expected to tick up to 2.6% vs. last month's 2.4%. The core rate (ex-food & energy) is expected to come in at 0.3% like last month, while the y/y rate is expected to match last month's 3.3%.

Fed Chair, Jerome Powell last week said he was "feeling good" about the economy and that they've made "significant progress on inflation." But noted, "if the economy remains strong and inflation is not sustainably moving toward 2%, we can dial back policy more slowly. If the labor market were to weaken unexpectedly, or inflation were to fall more quickly than anticipated, we can move more quickly."

But he reiterated that he believes inflation is on a "sustainable path back to 2%."

All eyes will be on this morning's CPI report.

And we'll see if the market can get back to its winning ways today.

See you tomorrow,