Stocks closed higher on Friday with all of the major indexes in the green, led by the small-cap Russell 2000 and mid-cap S&P 400 with outsized gains of 2.10% and 1.61% respectively. All of the indexes were up for the week as well, making it the fifth up week in a row for the big three indexes (Dow, S&P 500 and Nasdaq), along with the mid-cap index.

Friday's Producer Price Index (PPI) mostly confirmed that progress on inflation continues. The headline numbers showed inflation at the wholesale level unchanged (0.0%) m/m vs. last month's 0.2% pace and views for the same. The y/y rate was up 1.8%, which was above last month's 1.7% and estimates for 1.6%. But the core rate (ex-food & energy) was up 0.2% m/m vs. last month's 0.3% and views for 0.2%, while the y/y rate came in at 2.0% vs. last month's 2.4% and expectations for 2.7%.

While last week's CPI (retail inflation) was a mixed bag, it largely came in as expected, give or take a tenth of a percent in either direction. Combined, it underscored the belief that inflation risks have indeed receded and that further rate cuts are warranted.

Stocks cheered the news with the Dow, the S&P 500 and mid-cap S&P 400 breaking out to new all-time highs.

Friday's before-market earnings by several big banks energized the market as well with JPMorgan Chase posting a positive EPS surprise of 0.35% and a positive sales surprise of 3.87%. That translated to a quarterly EPS growth rate of 0.92% vs. this time last year, and a sales growth of 6.97%. They were up 4.44% on the day.

JPM's CEO, Jamie Dimon, expressed concern over rising geopolitical tensions, calling them "treacherous and getting worse." He also expressed wariness over the economy citing "large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world." But on a positive note, he acknowledged that "inflation is slowing and the U.S. economy remains resilient."

Other big banks posted positive EPS surprises as well with Wells Fargo reporting a 19.7% surprise, and BlackRock reporting a 9.98% surprise. WFC was up 5.61% on the day, and BLK was up 3.63%.

We'll hear from more big banks tomorrow when Bank of America, Citigroup and Goldman Sachs release their numbers. We'll also hear from other widely held companies in other industries including Johnson & Johnson, Walgreens and United Airlines.

Not much in the way of economic reports out today. But it picks up tomorrow with the Redbook report, and the NY Fed Manufacturing Index.

We won't get another look at inflation until October 31, when we'll get the next installment of the Personal Consumption Expenditures (PCE) index. And we won't get another look at the unemployment report until November 1. Both will come before the next Fed meeting on November 6-7.

Until then, the market will focus on earnings. Even though it unofficially began last week, it officially kicks off on Wednesday when Alcoa reports after the close.

Earnings is always an exciting time since stocks typically go up during earnings season.

I expect this earnings season to be no different. Especially given the upward trend of improvement on earnings estimates. Q3'24 earnings are expected to be up 3.1%, Q4'24 earnings are expected to be up 9.6%, Q1'25 is expected to be up 12.4%, and Q2'25 is expected to be up 13.4%.

In the meantime, we'll see if the markets can build upon last week's gains this week.

See you tomorrow,