Stocks closed lower yesterday, erasing intraday gains within the last hour of trade.

Last Wednesday's friendly FOMC announcement, and views by the Fed that they still see 3 rate cuts this year, saw stocks breakout to the upside on Wednesday and Thursday.

But since then, stocks have retraced some of those gains with the S&P marking their 3rd down day in a row. Although, for context, the S&P gained 1.22% on Wed. and Thurs., and only gave back -0.72% since then.

Nonetheless, stocks are trying to consolidate recent gains and build a base for the next leg up.

Yesterday's Durable Goods Orders rose 1.4% m/m, much better than last month's -6.9%, and slightly above views for 1.3%. Ex-Transportation it was up 0.5%, in line with the consensus, with Core Capital Goods up 0.7% vs. estimates for 0.1%.

The Case-Shiller Home Price Index (unadjusted) was off -0.1% m/m, an improvement from last month's -0.3% pace. On a y/y basis it was up 6.6%, which was above last month's 6.2%, and views for 6.5%.

The Richmond Fed Manufacturing Index fell to -11 vs. last month's -5.

And Consumer Confidence came in at 104.7, which was just below last month's downwardly revised 104.8 (from 106.7), and below the consensus for 106.7.

Today we'll get MBA Mortgage Applications, and the Survey of Business Uncertainty.

The main event this week, however, will be Friday's inflation report, i.e., the Personal Consumption Expenditures (PCE) index. That's the Fed's preferred inflation gauge.

Last month's core (ex-food & energy) PCE index came in at 2.8%. That's still above the Fed's 2% target, but well below 2022's peak of 5.3%.

The latest CPI (retail inflation) and PPI (wholesale inflation) reports showed disinflation slowing. And I would not be surprised to see the same thing with Friday's PCE.

But it reminds me of last month's comments by Austan Goolsbee, the President and CEO of the Federal Reserve Bank of Chicago. He said, "if you see inflation up a little bit, that doesn't mean that we're not on the target to get to 2%. We can still be on the path even if we have some increase and some ups and downs --- so let's not get too flipped out."

To the market's credit, it has not gotten 'too flipped out.' In fact, it's been continuing to make new highs, last few days notwithstanding.

So I am not overly concerned with Friday's report. But a report that shows inflation back on the decline would be welcome news and augur for rate cuts sooner rather later.

Note, the markets are closed on Friday in observance of Good Friday. So we'll get Friday's PCE report, but the market won't be able to act on it (in the regular session) until Monday.

So this week is a shortened trading week with just today and tomorrow left.

We'll see if the market can regroup and turn things into positive territory by week's end.

See you tomorrow,