Stocks closed modestly lower yesterday after Wednesday's record-setting day.

Actually, the Dow crossed another threshold yesterday after the Index briefly topped 40,000 for the first time ever. They weren't able to hold onto that level by the close. But the market will give it another try today.

Relief over largely better than expected inflation numbers this week sent stocks soaring to new all-time highs.

And with disinflation intact, the Fed is still expected to cut interest rates later this year. The odds still favor September or November at the earliest. But I've already heard some speculate that a surprise summer rate cut shouldn't be ruled out. That might just be wishful thinking at this point. But if disinflation accelerates, it's not out of the question.

In other news, yesterday's Weekly Jobless Claims fell by -10,000 to 222,000. Although, they did miss the consensus which called for 220.000. The smoother 4-week moving average came in at 217,750.

The Housing Starts and Permits report showed Starts rose to 1.360 million units (annualized) vs. last month's 1.287M, but missing views for 1.435M. Permits slipped to 1.440M vs. last month's 1.485M, and estimates for 1.480M.

The Philadelphia Fed Manufacturing Index declined to 4.5 vs. last month's 15.5 and the consensus for 7.8.

The Import and Export Prices report showed import prices up 0.9% m/m vs. last month's 0.6%, and views for 0.2%. On a y/y basis, import prices were up 1.1% vs. last month's 0.4% pace. Export prices roses 0.5% m/m vs. last month's 0.1%, and expectations for 0.2%. On a y/y basis, export prices fell -1.0%.

And Industrial Production was flat (unchanged) m/m vs. last month's 0.1%, and views for the same. Manufacturing Output fell -0.3% vs. last month's 0.2%, and estimates for 0.3%. And the Capacity Utilization Rate came in at 78.4%, just under last month's 78.5%, and in line with the consensus.

Today we'll get E-Commerce Retail Sales, and the Leading Indicators report.

And we'll see if the market can add to their gains.

With one more trading day to go, all of the indexes are up for the week. If they can do it again, that'll make it 4 up weeks in a row for the S&P 500, the Nasdaq Composite, the small-cap Russell 2000, and the mid-cap S&P 400. And it'll mark 5 up weeks in a row for the Dow.

As I mentioned yesterday, the market is in a great spot. The economy is doing well. Estimates for corporate sales and earnings are on the rise. Inflation is starting to head back down, once again. And interest rates are likely to head lower later this year.

Moreover, the cyclical tendencies are on the market's side with the 4-year Presidential cycle showing that year 4 (that's this year) is the second-best year of all four years (second only to year 3, which was last year when the market gained 24%). Simply put, stocks typically do well in Presidential election years.

And this year is shaping up to be another winner as well.

Best,