Stocks fell on Friday with most of the indexes down by -1.00% or more.

The Dow eked out a small gain for the week, but the others (S&P 500, Nasdaq, small-cap Russell 2000, and mid-cap S&P 400), all gave up their intraweek gains and ended lower. Not by much. But lower nonetheless.

Friday's Quadruple Witching (that's when index futures, stock futures, index options, and stock options all expire), might have had something to do with the extra volatility. But after a busy week of mixed inflation reports, and this week's upcoming FOMC announcement, there was probably a fair amount of position squaring taking place.

The Fed begins their 2-day FOMC meeting on Tuesday, September 19, and then gives their FOMC announcement on Wednesday, 9/20.

At the moment, the odds of a rate hike this month are only at roughly 5%. But the odds shift to a 40% chance for a hike when they meet in November. (And there's still one more meeting after that in December before the year is over.) Of course, nothing is set in stone. But that's the way the odds are looking.

In other news, Friday's Empire State Manufacturing Index rose to 1.9 vs. last month's -19.0 and views for -10.0.

Industrial Production rose as well with a 0.4% m/m increase vs. the consensus for 0.1%, while Manufacturing Output rose 0.1%, which was in line with expectations. The Capacity Utilization Rate ticked up to 79.7% vs. last month's 79.5% and views for 79.3%.

And Consumer Sentiment came in at 67.7, slipping from last month's 69.5 and missing estimates for 69.2. Elevated inflation is no doubt taking a toll on sentiment. Although, the year-ahead inflation expectations dipped to 3.1% vs. last month's pace of 3.5%. But that's still too high.

We also learned that the United Auto Workers (UAW) Union on Friday decided to strike the 'Big 3' automakers. It's the first time all three car companies were struck at the same time. The union, however, was implementing a targeted strike, rather than shutting down work at all plants. The union heads say it's to send a message that they are serious and to keep management guessing as to what happens next and when. But the shutdown will likely expand to more and more locations the longer the talks drag on with no agreement.

Traders will also be watching a potential shutdown of the government if Congress can't come to an agreement on a budget (11 spending bills) by the end of September 30, as a new fiscal year begins on October 1.

You can be sure there will be lots of grandstanding and brinkmanship by both parties as we head towards the deadline in just two short weeks.

In the meantime, all eyes will be on the Fed this week (Wednesday).

And we'll see if the market can regroup and start heading back up. Statistically, the odds favor a rally. Since 1950, if the S&P is up by more than 15% thru August (it was up 17.4% this year), with August being down (which it was), then September is typically up with a median gain of 3.3%, and a win ratio of 86% (6 out of 7 instances).

We'll see if the back half of the month can pull this out.

See you tomorrow,