Stocks closed lower yesterday with the Nasdaq down by -1%, but the Dow down by just -0.10%.

Follow-through selling after Friday's better than expected jobs report which showed the labor market accelerating, spilled over into Monday's session. (But whether that was really in response to the jobs report, or whether it was just an excuse to pull some profits after two weeks of sharp gains, remains to be seen.)

The key takeaway after Friday was that the economy was doing better than expected, while at the same time, wage inflation moderated.

True, the Fed's rate hikes do have a lagged effect. So we're likely to see some slowing in the coming months. But so far, the economy is proving to be resilient. And with inflation on the decline, more and more are beginning to believe that we may actually avoid a recession after all.

Not much in the way of economic reports out yesterday. But today we'll get the International Trade in Goods and Services report, and Consumer Credit.

We'll also hear from Fed Chair, Jerome Powell, as he speaks at 'The Economic Club of Washington DC' today. He will also be interviewed following his remarks. It's unlikely any new ground will be broken at the event. But you can be sure people will be listening closely to what he has to say.

Earnings season continues as well with another 134 companies set to report today. All in all, we'll get 697 companies reporting between today and the end of the week.

Also, the President will give his State of The Union address later this evening.

The SOTU addresses don't tend to be big market movers. But they can be.

In the meantime, stocks are off to a great start this year, the last couple of days notwithstanding.

As for the economy, not only is inflation easing, the economic forecasts have actually improved. And we are nearing the end of the interest rate hike cycle. That's a far cry from last year at this time when inflation was climbing, the interest rate cycle was just beginning, and the economic outlook was dimming.

2023 is shaping up to be a decidedly different year than last. And stocks are responding accordingly.

See you tomorrow,