Stocks closed lower yesterday as profit taking and position squaring pulled stocks off their recent highs.

Inflation and interest rates continue to be the main drivers of the market.

We'll get another look at inflation on Thursday, 6/30, when we get the Personal Consumption Expenditures Index. Then a week later on Wednesday, 7/6, we'll get the FOMC Minutes from the June 14-15 Fed meeting. That should give us more insight into what the Fed might do at their next meeting which takes place on July 26-27, where they may raise rates by either 50 or 75 basis points.

Prior to that, however, we'll get the third and final estimate for Q1 GDP today. The second estimate put GDP at -1.5%. The consensus for the third estimate is -1.4%. Whether that's marginally higher or lower is largely irrelevant as traders are more interested in what Q2 looks like. Right now, Q2, according the GDP Now forecast by the Federal Reserve Bank of Atlanta, is estimated at 0.30%. That's up from last week's 0.00%, but down from the 2.5% estimate a couple of months ago.

Of even more interest, of course, is what's ahead.

While it's clear the economy slowed quite a bit in the first half, many still have solid growth forecasts for the second half.

The Fed is forecasting full-year GDP to come in at 1.7% this year, and 1.7% again next year.

And St. Louis Fed President, James Bullard, in an interview earlier this month, said he does not see a recession this year or next. And that he sees a "pretty good second half," driven by "strong consumption this year."

In the meantime, the sell-off over the last several months seemed way overdone.

And valuations falling to their lowest levels in more than two years helps underscore that.

If the worst-case scenario does not play out (hard recession), then the market should climb much higher.

Especially if upcoming inflation readings finally show inflation cresting.

For now, plenty of economic reports continue to point to growth. And that's definitely a positive for the market.

Best,